1. Click on Settings>Localization.
2. Click on the Geo Zones icon.
3. Click on Add button to create new Geo zone.
4. Enter Geo Zone Name and Description.
5. Click on Add icon to define the rule for the zone.
6. Select the Country.
7. Select the Zone respective to the selected country.
8. Click on Add icon to add more zones in the list.
9. Click on Save button.
*Geo-zones are very important to define properly. Make sure you don't add a zone in multiple Geo-zone.
**You can decide the shipping & payment option as per a particular geo-zone. This helps you configure your shipping & payment rules.