The Goods and Services Tax, or GST, was first imposed in India on July 1st, 2017. Among the crucial aspects of GST are the classifications of interstate and intrastate transactions determining the applicable taxes—IGST, CGST, or SGST. The provider’s location and the supply’s destination play a pivotal role in categorizing a transaction as either intrastate or interstate. This blog delves into an understand intrastate and interstate GST, providing a comprehensive understanding of the GST law in these contexts; for individuals seeking in-depth knowledge on GST, enrolling in GST Training in Chennai can be a valuable opportunity to gain expertise.
Inter State Meaning In GST
When a supplier of goods or services is based in one state or union territory and the customer is located in another, this is known as an interstate supply. This category encompasses import, export, and supply to or from Export-oriented Units (EOU) or Special Economic Zone (SEZ) units. In India, interstate supplies are subject to Integrated GST (IGST) levied by the Central Government. The applicable IGST rate is determined by the nature of the goods or services and the prevailing rates.
Intra State Meaning In GST
Conversely, an intrastate supply refers to a scenario where both the supplier and the location of the supply are within the same state. SGST, UTGST and CGST apply to supplies made within the state. These taxes are levied separately by the Central government and the State/UT government, respectively.
Difference Between Intrastate And Interstate
The following table outlines the main distinctions between India’s intrastate and interstate GST systems:
Applicable on:
- Supply of products and services amongst Union Territories and several states.
- Supply of products and services inside the same union territory or state.
Tax rate:
- The applicable IGST rate is determined by the kind of good or service and the current rates.
- Depending on the good or service, rates for CGST and SGST are applied separately and equally at the current rate.
Place of supply:
- Distinct state from the supplier’s location.
- Same state as the supplier’s location.
Input Tax Credit:
- The IGST input tax credit and the IGST liability can balance CGST/SGST liabilities in any order.
- When IGST credit is entirely exhausted, CGST and SGST credit can be used to offset IGST obligations as well as CGST and SGST liabilities. It is not permitted to use CGST and SGST jointly.
In general, there are two different forms of GST in India: intrastate GST and interstate GST, which are applied based on the supplier’s and the supplier’s location. For those looking to understand the intricacies of GST and its application, various Training Institute in Chennai can provide comprehensive courses on the subject.