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Integrated Goods and Service Tax – IGST

What is IGST?

Every business owner has to pay GST while supplying their goods and services. IGST, CGST, and SGST are three parts of GST used to calculate and collect taxes easily.

IGST Full Form

IGST stands for Integrated Goods and Services Tax.

IGST Meaning

IGST (Integrated Goods and Services Tax) is a tax levied when a business owner wants to transport items to another state. IGST is also applicable for the import and export of goods and services.

IGST is one of the three core taxes that form the GST. The other two are CGST (Central Goods and Services Tax) and SGST (State Goods and Services Tax). IGST is applied when items have to be transported between two or more states.

Under IGST:

  • Exports are not rated
  • The Central and State Government shares the levied IGST

IGST Features

IGST (Integrated Goods and Services Tax) has several useful features. They are:

  • IGST = CGST + SGST
  • IGST is levied on the recipient or importing state as IGST is destination-based
  • As business owners have to pay IGST only once, it brings down the tax level

Explaining IGST

For understanding IGST completely, let us consider an IGST example:

  • A business owner A from Maharashtra wants to sell goods to a buyer B from Madhya Pradesh.
  • The total cost of the goods is INR 50,000.
  • The GST rate is 18%. Hence, it is considered the IGST is 18%.
  • The business owner A will charge INR 9,000 as IGST to the buyer B.
  • Buyer B will pay the amount (total INR 59,000) to business owner A
  • Business owner A will collect it and submit the IGST to the government

It is necessary to note that IGST = CGST + SGST.

For interstate transfers, if IGST is 18%, for intrastate transfers, the CGST will be 9% and the SGST will be 9%. In other words, CGST and SGST are two halves of IGST. This is applicable for all products irrespective of their GST percentage.

Important Points to Remember About IGST

IGST is payable when the supply is transferred from one state to another. There are a few important things you must remember about IGST:

  • IGST is levied by the importing state and it receives the final IGST revenue
  • Integrated Goods and Services Tax or IGST is the total of the state government’s tax (SGST) and the central government’s tax (CGST)

IGST Refunds

  • IGST for NRIs is based on similar rules as those on exports. The NRI can visit India for a period of less than six months. When the NRI leaves India, the government refunds the IGST paid on the goods bought in India and taken outside the country.
  • If the taxpayer has already paid CGST and SGST instead of IGST, then they can apply for an IGST refund. They have to then pay the IGST in the proper tax slot.

FAQs

Which goods and services are classified under IGST?

Goods and Services which are registered in one state and transported inter-state, between states, union territories come under the classification of IGST.

Which is the governing body for IGST?

The centre or the central government is the governing body that looks over all the IGST transactions.

Do states not get benefit under IGST?

No. Once the transactions have been confirmed by the governing body, the central government will pass on the tax benefit to the importing state of the goods and services for the transactions mentioned.

Which is the state that gets the tax benefit under IGST?

The importing state of the goods and services is the state that will be passed on the tax benefit

Is GST same as IGST?

GST is the tax that is levied across all goods and services. IGST is a part of GST and is levied when goods or services are transferred across two states.

I want to transfer goods from Mumbai to Pune. Will I have to pay IGST?

IGST is an interstate tax. You have to pay it only if you are transferring goods between two states. As Mumbai and Pune are in the same state, you will not have to pay IGST. Instead, you will have to pay CGST and SGST.

Can I get a refund on IGST?

Yes, there are particular rules for getting IGST refund. If you are an NRI taking Indian goods outside the country, you will get an IGST refund on the goods. If you have paid SGST and CGST, you will get IGST refund.

Who gets IGST?

The importing state gets IGST.

Do I have to pay IGST if I have paid SGST and CGST?

IGST = CGST + SGST. Hence, if you have paid CGST and SGST, you do not have to pay IGST.