IGST

IGST stands for Integrated Goods and Services Tax. It is a tax levied on the supply of goods and services in India where the location of the supplier and the place of supply are in different states. This means IGST applies to interstate transactions, as opposed to intrastate transactions which are subject to CGST (Central Goods and Services Tax) and SGST (State Goods and Services Tax).

The IGST Act, 2017, governs the levy and collection of this tax. It is designed to ensure that the tax revenue goes to the consuming state, thereby avoiding the cascading effect of taxes that occurred under previous indirect tax laws. When goods or services move from one state to another, IGST is charged at a rate equivalent to the sum of CGST and SGST rates that would have been applicable if the transaction were intrastate.

For instance, if the GST rate on a particular product is 18%, and it's sold from State A to State B, the IGST levied will be 18%. The supplier in State A collects this IGST and pays it to the central government. The central government then transfers the portion of the tax attributable to the consuming state (State B) to that state after the necessary reconciliation. This mechanism simplifies the tax structure for businesses operating across states and ensures a seamless flow of tax credit. It also simplifies the process of tax administration and compliance.