Integrated Goods and Services Tax: The Brief Guide

 India gives both central and state governments the power to levy and collect taxes. Traditionally, there were so many types of indirect taxes running together that made the country's taxation system complicated. However, after GST (Goods and Services Tax) 2017, the system became much smoother and easier to understand.

IGST: Meaning

If the transportation of goods and services happens between the states, it is called inter-state transactions. IGST is applicable only to inter-state transactions. IGST extended form is Integrated Goods and Services Tax. IGST percentage varies from 0%, 0.25%, 3%, 5%, 12%, 18%, and 28% depending on the commodity. 

You can use Eazybills for filling IGST, CGST, and SGST. 

Objectives of IGST

The following are the two main objectives of the IGST Act:

• To prevent a cascading effect, allow inter-set off state and central GST. 

• To help in fulfilling the principle of destination-based consumption tax.

Features of IGST

                                    

The following are the features of IGST:

• IGST is the total of CGST and SGST. 

• The government charges this on the Interstate and the cross-border transactions of Goods and Services. 

• There will be a uniform IGST rate across the country. 

• The Centre and State will share IGST. 

• Interstate traders will pay IGST after adjusting the available input on the transactions.

IGST Refund

Exporters can export goods with payment of Integrated Goods and Services Tax or without payment of Integrated GST (IGST) under Bond or Letter of Undertaking (LTU). In both cases, he is eligible for an IGST Refund.

Differences between CGST, SGST, and IGST

There are several critical differences between CGST, SGST, and IGST. Let's take a look into some fundamental differences:

• Applicability- CGST and IGST apply to intra-state goods and services supply. IGST applies to inter-state goods and services supply.

• Tax Collecting Authority- the central government collects CGST, the state government collects SGST, and the central government collects IGST. Still, there is equal distribution of revenue between central and state governments.

• Input Tax Adjustment Permissible- You can use the input tax credit of CGST against CGST or IGST but not SGST. In the case of SGST, you can use Input Tax Adjustment against SGST or IGST but not CGST.

Conclusion

This blog covers a complete outline of IGST with its objectives and functions. I hope you find this blog insightful. In case of any queries, feel free to contact our customer care team.