IGST : What is IGST and when is IGST levied

Goods and Services Tax (GST) is an indirect tax (or consumption tax) used in India on the supply of goods and services. It is a comprehensive, multistage, destination-based tax that was introduced in 2017.

The GST replaced multiple taxes previously levied by the central and state governments.

What is IGST?

There are three categories under GST which are Central Goods & Services Tax (CGST), State Goods & Services Tax (SGST) or Integrated Goods & Services Tax (IGST)

Under GST, CGST is levied on Intra State supplies of both goods and services by the Central Government and is governed by the CGST Act. SGST is levied on the same Intra State supply but is governed by the State Government.

IGST, however, is levied and collected by the Centre on inter-State supply of goods and services in which

• Exports are zero-rated.
• Tax will be shared between the Central and State Government.

IGST abolished the Central Sales Tax (CST) Act, 1956, which regulated the inter-state trade or commerce. The IGST model monitors the inter-state trade of goods and services and ensures that the SGST component accrues to the consuming State. It takes ‘Business to Business’ and ‘Business to Consumer’ transactions into account.

The IGST rate is equal to the CGST rate plus SGST rate.

When does a seller charge a buyer IGST?

Here are a few scenarios in which IGST is charged on a bill:

• Supply of goods from one State or Union Territory to another State or Union Territory
• Supply of services from one State or Union Territory to another State or Union Territory
• Import of goods till they the cross customs frontier
• Supply of goods/services to/by SEZ
• Supplies to international tourists
• Any other supply in the taxable territory that is not intra-State – supply of goods or services within the State or Union Territory.

Why does DataTracks charge IGST for it services?

As explained about, in cases of export or supply of goods/services by a seller situated in a Special Economic Zone (SEZ) the transaction is assumed to be Inter-State and only IGST is applicable.

Similarly, if you offer services or goods to a buyer situation in any SEZ, the bill has to be Zero Rated for GST.  Always ask your supplier or buyer their IGST certificate for your records and GST filing.

If you have any queries, write to us on enquiry@datatracks.in or contact us on +91 44 4208 1719

About DataTracks

DataTracks, a global leader in regulatory compliance reporting solutions, has been in business since 2005 and has helped prepare more than 172,000 reports since inception. DataTracks provides fully assisted services in selected regulatory regimes where inputs provided by clients in traditional formats are converted to HTML, XML, XBRL or iXBRL formats.

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