Integrated goods and services tax

As we all know IGST stands for Integrated Goods and Services Tax.

 IGST is one of the three components of Goods and Services Tax. IGS tax is levied when there is an inter-state transfer of goods and services.

The three components of GST are: -

CGST: Central Goods and Services Tax

SGST: State Goods and Services Tax

IGST: Integrated Goods and Services Tax

 GST was introduced by the central government in July 2017, It is a comprehensive indirect tax levied on the manufacture, sale, and consumption of goods and services across India. With a single tax system, GST replaced multiple indirect taxes, such as VAT, excise duty, and service tax. The introduction of GST aimed to simplify the indirect tax system, remove the cascading effect of taxes, and promote ease of doing business in India. GST is levied at multiple rates, such as 0%, 5%, 12%, 18%, and 28%, depending on the nature of goods and services.GST has undergone several changes, including updates to tax rates and filing procedures. The implementation of GST has had a significant impact on businesses and the economy as a whole, and it continues to be a crucial aspect of India's tax system.

Introduction to CGST, SGST, and IGST

 There were multiple taxes such as Central Excise, Service Tax, State VAT, etc., and the GST introduces just one tax with three components- CGST, SGST, and IGST.

When the supply of goods or services happens within a state called intra-state transactions, then both the CGST and SGST will be collected. Whereas if the supply of goods or services happens between the states called inter-state transactions, then only IGST will be collected.The use of correct GSTIN becomes important to identify the applicability of taxes. Hence, validate with the help of the GST search tool before using the GST number in the sales invoice. GST is a destination-based tax, which is received by a state where the goods are consumed but not by a state where such goods are manufactured.

The full form of CGST is Central Goods and Services Tax.

 Under GST, CGST is a tax levied on intrastate supplies of both goods and services by the Central Government and collected by it for its coffers. Accordingly, the levy and collection of CGST are governed by the provisions of the CGST Act, 2017 as amended from time to time.

Together with CGST, an equal value of SGST will also be levied on the same intrastate supply but will be governed by the particular state government.

For example 

If a seller sells a product to a buyer within the same state, say Telangana, then CGST and SGST will apply.

This implies that both the Central and state governments will agree on combining their levies with an appropriate proportion for revenue sharing between them.

It is clearly mentioned in Section 8 of the CGST Act that the taxes be levied on all intrastate supplies of goods and/or services but the tax rate shall not exceed 14%, for each.

SGST Full form and when SGST is applicable

SGST means State Goods and Services Tax. Under GST, an equivalent amount of SGST is a tax levied on intrastate supplies of both goods and services by the particular state government where the product sold is consumed.

Therefore, the levy and collection of SGST are governed by the respective state’s SGST Act, 2017 as amended from time to time, for instance, Telangana GST Act. After the introduction of the SGST, all the state taxes such as the value-added, entertainment, luxury, and entry taxes were merged under SGST.

As explained above, CGST will also be levied on the same intrastate supply but will be governed by the Central Government.