The Integrated Goods and Services Tax Act governs taxation of inter-state supplies, imports, exports, and SEZ supplies. IGST ensures seamless credit flow across state boundaries and implements the destination principle — tax revenue goes to the consuming state.
Definitions including 'import of goods' (bringing goods into India from outside), 'import of services' (supplier outside India, recipient in India), 'intermediary', 'location of supplier/recipient', 'non-taxable online recipient', 'online information and database access (OIDAR) services', 'zero-rated supply'.
IGST administered by Central Government officers. Officers appointed under CGST Act deemed appointed under IGST Act. Authorisation of state officers for specific functions.
Section 5: IGST levied on all inter-state supplies at rate = CGST rate + SGST rate. Collected by Central Government and apportioned to destination state. Section 6: Power to exempt certain supplies from IGST.
Section 7: Inter-state supply — where location of supplier and place of supply are in different states/UTs. Section 8: Intra-state supply — both in same state/UT. Section 9: Supplies in territorial waters.
Section 10: Place of supply of goods (other than import/export). Section 11: Place of supply of goods on import/export. Section 12: Place of supply of services (supplier and recipient in India). Section 13: Place of supply of services (either party outside India). Section 14: Special provisions for SEZ.
Section 15: Refund of IGST paid on goods/services exported out of India. Section 16: Zero-rated supply — exports and supplies to SEZ. Option to export (a) with payment of IGST and claim refund, or (b) under LUT/Bond without IGST payment.
Zero-rated supply includes: (a) Export of goods or services, (b) Supply to SEZ developer/unit. Supplier can claim refund of ITC (unutilised) or refund of IGST paid on such supply.
Section 17: Tax apportionment between Centre and States/UTs. IGST collected on inter-state supply is settled to the destination state. Section 18: Transfer of ITC — IGST credit can be used for CGST, SGST, IGST in that order.
Tax wrongfully collected and paid to Central/State Government. Application of CGST Act provisions to IGST. Transitory provisions, power to make rules, removal of difficulties.
Rule: Supplier in State A, Place of Supply in State B
Example: Delhi seller ships goods to Mumbai buyer → IGST
Rule: Supplier and Place of Supply in same state
Example: Chennai seller ships to Chennai buyer → CGST + SGST (Tamil Nadu)
Rule: Goods entering India from another country
Example: Machinery imported from Germany → Basic Customs Duty + IGST
Rule: Supplier outside India, recipient in India
Example: SaaS subscription from US company → IGST under reverse charge
Rule: Goods shipped out of India
Example: Textiles exported to UK → Zero-rated (refund of ITC or IGST)
Rule: Supply to SEZ developer/unit
Example: IT services to SEZ unit in Noida → Zero-rated under Section 16
IGST is levied on inter-state supplies (where supplier location and place of supply are in different states). CGST+SGST are levied on intra-state supplies (both in same state). The total tax rate is the same — e.g., 18% GST means either 18% IGST or 9% CGST + 9% SGST. The difference is only in which government collects and retains the tax.
The IGST Act, 2017 has 25 sections organized into 9 chapters. It is shorter than the CGST Act because it primarily deals with inter-state supply determination, place of supply rules, zero-rated supplies, and IGST settlement between states.
Under Section 16, zero-rated supplies include: (1) Export of goods or services or both, and (2) Supply of goods or services or both to a SEZ developer or unit. The supplier can either export with IGST payment and claim refund, or export under Letter of Undertaking (LUT) without paying IGST and claim refund of accumulated ITC.
Yes. IGST credit is the most versatile — it can be used to pay IGST first, then CGST, then SGST (in that order of priority). This cross-utilization is allowed under Section 49A and Section 49B of the CGST Act, with the new circular order effective from February 2019.
IGST collected on inter-state supply is apportioned to the destination state (consuming state). The settlement happens through the IGST Settlement mechanism managed by the Central Government. This ensures the consuming state gets its share of tax revenue, implementing the 'destination principle' of GST.
Set supplier state, add buyer GSTIN — Laabam.One auto-applies IGST or CGST+SGST. Zero configuration.
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