IGST ACT
The IGST Act is the Integrated Goods and Services Tax Act, 2017, which is a law that provides for the levy and collection of tax on the inter-state supply of goods or services or both by the Central Government and for matters connected therewith or incidental thereto.
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What is IGST Act
The IGST Act is the Integrated Goods and Services Tax Act, 2017, which is a law that provides for the levy and collection of tax on the inter-state supply of goods or services or both by the Central Government and for matters connected therewith or incidental thereto. The IGST Act is part of the GST regime that was implemented in India on July 1, 2017. The IGST Act aims to ensure a seamless flow of input tax credits across States and avoid double taxation of inter-state transactions.
Some of the main features of the IGST Act are:
The IGST is levied on all inter-state supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption.
The IGST is levied on the value determined under section 15 of the CGST Act, 2017, which includes the transaction value and any other charges, taxes, fees, etc. that are not included in the GST.
The IGST is collected by the Central Government and apportioned between the Centre and the States or Union Territories in accordance with the prescribed formula.
The place of supply of goods or services or both is determined by the provisions of Chapter V of the IGST Act, which specify different rules for different types of supplies, such as supply of goods imported into or exported from India, supply of services where the location of supplier or recipient is outside India, supply of services in relation to immovable property, etc.
The IGST Act also provides for a refund of integrated tax to international tourists who purchase goods in India and take them out of India, and a zero-rated supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit.
Origin And Commencement of IGST Act
The origin and commencement of IGST Act can be summarized as follows:
- The IGST Act is an abbreviation for the Integrated Goods and Services Tax Act, 2017, which was enacted to levy, collect and administer IGST in India.
- IGST is a tax levied on the supply of any goods or services during inter-state trade or commerce, including import and export transactions.
- The IGST Act was passed by the Parliament on 12th April 2017 and received the assent of the President on the same date.
- The IGST Act was initially applicable to the whole of India except the State of Jammu and Kashmir. However, later it was extended to Jammu and Kashmir by another Act, which came into force on 8th July 2017.
- The IGST Act came into force on such dates as the Central Government notified in the Official Gazette, with different dates for different provisions. Many of the provisions came into effect from 1st July 2017 .
IGST Example
IGST stands for Integrated Goods and Services Tax, which is a tax levied on the supply of goods or services during inter-state trade or commerce, including import and export transactions. IGST is collected by the Central Government and then apportioned to the States based on the destination principle. IGST ensures a seamless flow of input tax credit chain on inter-state transactions, without requiring the payment of tax upfront or blocking the funds for the inter-state seller or buyer.
Here are some examples of IGST with calculation:
- Suppose a dealer in Delhi sells goods worth Rs. 10,000 to a buyer in Mumbai. The GST rate applicable to the goods is 18%, which comprises entirely of IGST. Therefore, the dealer charges Rs. 1,800 as IGST from the buyer and pays that amount to the Central Government. The Central Government then splits the IGST revenue between itself and Maharashtra, the destination state.
- Suppose a dealer in Gujarat sells goods worth Rs. 20,000 to a buyer in Uttar Pradesh. The GST rate applicable to the goods is 12%, which comprises entirely of IGST. Therefore, the dealer charges Rs. 2,400 as IGST from the buyer and pays that amount to the Central Government. The Central Government then splits the IGST revenue between itself and Uttar Pradesh, the destination state.
- Suppose a dealer in Karnataka sells goods worth Rs. 15,000 to a buyer in Kerala. The GST rate applicable to the goods is 5%, which comprises entirely of IGST. Therefore, the dealer charges Rs. 750 as IGST from the buyer and pays that amount to the Central Government. The Central Government then splits the IGST revenue between itself and Kerala, the destination state.
Frequently Asked Questions
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The Integrated Goods and Services Tax (IGST) Act is a crucial component of India’s Goods and Services Tax (GST) regime. It governs the taxation of the supply of goods and services involving interstate transactions and imports. The IGST Act ensures a seamless and uniform tax structure for transactions that occur between different states in India.
The IGST Act specifically deals with transactions involving the movement of goods and services between states. Unlike Central GST (CGST) and State GST (SGST), which apply to intrastate transactions, IGST is applicable when the supply involves movement across state borders.
The IGST tax is a combination of both CGST and SGST. When goods or services move from one state to another, the IGST is levied by the central government, and the revenue is shared between the center and the destination state.
The IGST on interstate transactions is calculated as a percentage of the transaction value. The rate is determined by the GST Council, and it is uniform across all states to maintain consistency in the taxation system.