Introduction to IGST (Grade A)

Summary:

This Introduction to IGST note covers the introduction of Integrated Goods and Service Tax (IGST) under the GST regime to monitor inter-state trade transactions. IGST is levied by the central government in lieu of CGST and SGST, with a single rate shared between the center and states. The article also highlights important definitions, such as the customs frontiers of India and the location of the recipient/supplier of services. It further explains the determination of the nature of supply, including exceptions such as supplies made to tourists and in territorial waters.

Excerpt:

Introduction to IGST

States do not have the power to levy tax on transactions that take place outside the State or in the course of the import of the goods into, or export of the goods out of the territory of India.
In the pre-GST regime, the Central Sales Tax Act, of 1956 regulated the transactions of inter-State trade or commerce Under GST, the Integrated Goods and Service Tax (IGST) is a mechanism to monitor the transactions of inter-State trade of goods and services through the IGST Act 2017.

Salient Features of IGST
– Levied on inter-state and cross-border transactions.
– IGST is levied by the Central Government in lieu of CGST and SGST.
– A single rate equal to CGST+SGST/UTGST
– Shared between center and states.
– Levied on all interstate transactions of taxable goods and services.
– IGST is payable after adjusting available input credit of IGST, CGST, and SGST on purchases.

Important Definitions to be Referred
– Customs frontiers of India
– Export of goods
– Export of services
– Import of goods
– Import of services
– Location of the recipient of services
– Location of the supplier of services

Determination of Nature of Supply
Inter-State supply of Goods and Services (u/s7)- supply of goods/services shall take place in the course of inter-state trade or commerce if:
– i. The location of the supplier and the place of supply is in the:
(a) Two different States
(b) two different Union territories