Inter State supplies under GST

Term Inter State supplies under GST

 

In this article, the information about Inter State supplies under GST is explained here.

Inter State supplies:

Inter-State Goods and Service Tax (IGST)

IGST would be levied on all supplies of goods or services in the course of inter-state trade or commerce. IGST would be applicable to import of goods or services from outside country as well, which is indicated in the Constitutional Amendment Act, 2016.

The balance of credit under VAT as well as CENVAT Credit can be carried forward from the earlier regime. Further the duty and tax paid on closing stock would be available as credit where duty paying documents available, for hitherto exempted products / services which may not have been claimed as set-off. Lower deemed credit is available for those who do not have duty paying documents.

Significance of taxing inter-State supplies

GST is primarily a destination-based consumption tax. The place of supply of a particular transaction, coupled with the location of the supplier, will determine the nature of the tax to be paid by a tax payer. If the location of the supplier and place of supply are in the same State (including UTs with legislature) the transaction will be an intra-State transaction and the tax payer will be liable to pay State + Central Tax. If they are in different States, the transaction will become inter-State transaction and the tax payer will be liable to pay Integrated Tax and part of the Integrated Tax collected transferred to the State where the consumption takes place i.e. the State where the place of supply is located.

Transactions between two UTs and transactions to/from UT from/to another State are also treated as inter-State transactions liable to Integrated Tax. Transactions within a UT without legislature would be charged to UT GST or UT Tax. The inter-State supplier will be allowed to avail credit of various GST taxes paid on his purchases. This will allow maintenance of uninterrupted ITC chain at all-India level.

Meaning of inter-State supply

The IGST Act provides that following supplies will be inter-State supplies:

  • Supply of goods and/or services where location of the supplier and place of supply are in two different States; or two different Union territories; or a State and a Union territory.
  • Supply of goods and/or services where location of the supplier is in India and the place of supply is outside India (normally referred to as exports).
  • Supply of goods and/or services in the course of import into territory of India.
  • Supply of goods and/or services to or by a SEZ developer or an SEZ unit.
  • Any supply of goods and/or services in the taxable territory, not being an
  • Intra-State supply and covered above (e.g. supply from a State to a place/ location to a place located in EEZ/Continental shelf and vice-versa)

The information provided here is about Inter State supplies under GST.  If you would you like to add more information about Inter State supplies under GST, share below your thoughts.

 

 

 


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