Sections 12 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
The last three specific rules in section 12. Two of them turn on what the supplier holds on its records; the third splits a single contract across every State it reaches.
Section 12(12): the place of supply of banking and other financial services, including stock broking services, to any person shall be the location of the recipient of services on the records of the supplier; proviso — if the recipient's location is not on the records of the supplier, the location of the supplier. Section 12(13): the place of supply of insurance services — (a) to a registered person, the location of such person; (b) to a person other than a registered person, the location of the recipient on the records of the supplier. Section 12(14): the place of supply of advertisement services to the Central Government, a State Government, a statutory body or a local authority, meant for the States or Union territories identified in the contract, shall be taken as being in each of them, with the value in proportion to the amount attributable to dissemination in each, as determined in terms of the contract, or on such other basis as may be prescribed.
Section 12(12): banking, financial and stock broking
"To any person" — no registration split. The same test for a corporate and a retail customer.
The test: the location of the recipient of services on the records of the supplier of services.
The proviso: where the recipient's location is not on the records, the place of supply is the location of the supplier.
Two consequences.
The customer's KYC address governs. A bank determines the place of supply from the address it holds — which for a corporate customer is the address recorded against the account, not necessarily the registration the customer wants the credit in.
So the account, not the transaction, decides where the credit lands. A company with registrations in several States, operating a single account held against its Maharashtra address, receives banking services with a place of supply in Maharashtra — even where the services relate to operations elsewhere.
Which makes account structuring a GST question. Where credit needs to accrue in a particular State, the account should be held against that registration's address, and the bank's records updated accordingly.
And note s.17(4). A banking company, financial institution or NBFC engaged in supplying services by way of accepting deposits or extending loans or advances has the option to avail an amount equal to fifty per cent of eligible credit each month, with the rest lapsing — a separate regime on the supplier's own credit side. Section 17(4) →
Section 12(13): insurance
A registration split, unlike banking.
(a) To a registered person — the location of that person. So corporate insurance, taken on the GSTIN, has its place of supply at the insured's registration, and the credit is usable there.
(b) To an unregistered person — the location of the recipient on the records of the supplier. The policyholder's address as the insurer holds it.
The practical point for a business: insurance taken on the GSTIN produces a place of supply at the company's location and a usable credit; the same policy taken in an individual's name does not.
And the credit itself is subject to s.17(5). Insurance relating to motor vehicles, vessels and aircraft is blocked by s.17(5)(ab) except in the specified situations; life and health insurance for employees is blocked by s.17(5)(b) except where the employer is obligated to provide it under any law for the time being in force. So the place-of-supply answer does not by itself make the credit available. Section 17(5)(ab) → Obligatory under law →
Section 12(14): advertising to government
The only sub-section in s.12 keyed to a specific class of recipient — the Central Government, a State Government, a statutory body or a local authority.
The mechanism: where the advertisement is meant for the States or Union territories identified in the contract or agreement, the supply is treated as made in each of those States, with the value in proportion to the amount attributable to services provided by way of dissemination in the respective States — as determined in terms of the contract, or, in its absence, on such other basis as may be prescribed.
Note what the apportionment tracks: dissemination, not billing, not where the creative work was done, not where the agency is located. Where the advertisement is seen or heard is what the sub-section apportions by.
So the contract must identify the States — and, ideally, the amount attributable to each. A government advertising contract that names the States but not the split leaves the apportionment to be prescribed.
Why it exists. A national government campaign placed by one agency is consumed across the country. Without s.12(14), the whole supply would land in the Government department's location, giving that State the entire revenue on a campaign benefiting all. The sub-section distributes it in line with the destination principle.
The same architecture appears three other times in s.12 — 12(3) for immovable property spanning States, 12(7) for a multi-State event, and 12(11) for a leased circuit — and in s.13(7) on the cross-border side. In every case the contract controls the apportionment, and drafting it is the cheapest way to fix the outcome. Section 12(3) →
The pattern across section 12
Having worked through all thirteen specific sub-sections, the design is visible:
| Test used | Sub-sections |
|---|---|
| Recipient's registration | 12(2)(a), 12(5)(a), 12(7)(i), 12(8)(a), 12(9)(a), 12(13)(a) |
| Where performed or held | 12(4), 12(5)(b), 12(6), 12(7)(ii) |
| Physical location of property or infrastructure | 12(3), 12(11)(a) |
| Supplier's records | 12(2)(b)(i), 12(11)(b) and (d), 12(12), 12(13)(b) |
| A point in the transaction | 12(8)(b) handover, 12(9)(b) embarkation, 12(10) first departure, 12(11)(c) point of sale |
| Apportioned across States | 12(3) Expl., 12(7) Expl., 12(11) Expl., 12(14) |
| Default to supplier's location | 12(2)(b)(ii), 12(11) first proviso, 12(12) proviso |
The consistent theme: the Act picks, for each service, the datum that the supplier actually holds or can observe — and defaults to the supplier's own location where it holds nothing.
Key takeaways
- Section 12(12) uses the recipient's location on the supplier's records, with no registration split — so the account address decides where banking credit lands.
- Section 12(13) splits: registered — the person's location; unregistered — the records address.
- Insurance taken on the GSTIN produces a usable credit; taken personally, it does not — subject to s.17(5).
- Section 12(14) apportions government advertising across the States identified in the contract, by dissemination.
- Four apportionment rules exist in s.12, and in each the contract controls.
- The Act consistently picks the datum the supplier holds, defaulting to the supplier's location where it holds none.
Read next
- Section 12(11): Telecommunication, Broadcasting, Cable and DTH
- Section 13(2): The Default Cross-Border Rule
- Section 17(4): The Banking Company Fifty Per Cent Option
- Section 12(3): Immovable Property and the Proportionate Rule
Disclaimer: Positions stated as on 5 September 2026, based on the IGST Act and the CGST Act as amended to 31 March 2026 (ICAI Bare Law, 12th edition).