In an embodiment, a computer-implemented method provides mechanisms for identifying a source location in a service chaining topology. In an embodiment, a method comprises: determining, at an egress interface of a host that hosts a virtual machine (“VM”), whether a service plane MAC address (“spmac”) in a packet header of a packet, provided to the egress interface, is the same as an inner destination MAC address in the packet; in response to determining that the spmac in the packet header of the packet, provided to the egress interface, is the same as the inner destination MAC address in the packet: encapsulating the packet with a destination virtual tunnel endpoint (“VTEP”) address retrieved from a mapping of VTEP-labels onto VTEP addresses; and causing providing the packet from the egress interface of the host that hosts the VM to a source host that hosts a source guest virtual machine (“GVM”).