अन्तर्घनो देशे

Operational rule vidhi

The verb हन् preceded by the word अन्तर् takes the affix अप् and घन् is the substitute of the word हन् when the word so formed means 'a country'.

Word by word (padaccheda)

Substitute / term अन्तर्घनः prathamā · ekavacanaRight context देशे saptamī · ekavacana

Substitute / term Prathamā (1st case): in operational rules, the substitute or the thing introduced; in definitions, the term or its referent.
Right context Saptamī (7th case): "when X follows", the operation applies to what precedes (1.1.66 तस्मिन्निति निर्दिष्टे पूर्वस्य). Also a condition or domain ("in the sense of").

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Full reading

अन्तर्घनः देशे

Pāṇini leaves out words that carry over from earlier sūtras. Expand to see the rule as a reader actually understands it.

Commentary

The verb हन् preceded by the word अन्तर् takes the affix अप् and घन् is the substitute of the word हन् when the word so formed means 'a country'.
As अन्तर् + हन् + अप् = अन्तर् = घन् + अ = अन्तर्घनः 'name of a country of Bahika'; (a porch or court, an open space before the house between the entrance door and the house). Some write the word with a ण as अन्तर्घणः, that is also valid.

Why do we say 'when meaning a country'? Observe अन्तर्घातो 'striking in the middle'.

Śrīśa Chandra Vasu, The Ashtadhyayi of Panini (1897), via ashtadhyayi.com.