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Analysis on IGST

Mohan Arya  
on 01 June 2017

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IGST Means: "Integrated Goods and Services Tax" (IGST) means tax levied under the IGST Act on the supply of any goods and/ or services in the course of inter-State trade or commerce.

Inter state suppliers: A supply of goods and/or services in the course of inter-State trade or commerce means any supply where the location of the supplier and the place of supply are in different States, two different union territory or in a state and union territory. Further import of goods and services, supplies to SEZ units or developer, or any supply that is not an intra state supply.

Levy and paid IGST

  • IGST shall be levied and collected by Centre on inter-state supplies.
  • IGST would be broadly CGST plus SGST and shall be levied on all inter-State taxable supplies of goods and services.
  • The inter-State seller will pay IGST on value addition after adjusting available credit of IGST, CGST, and SGST on his purchases.
  • The Exporting State will transfer to the Centre the credit of SGST used in payment of IGST. The Importing dealer will claim credit of IGST while discharging his output tax liability in his own State. The Centre will transfer to the importing State the credit of IGST used in payment of SGST. The relevant information is also submitted to the Central Agency which will act as a clearing house mechanism, verify the claims and inform the

The IGST payment can be done utilizing ITC or by cash. However, the use of ITC for payment of IGST will be done using the following hierarchy -

  • First available ITC of IGST shall be used for payment of IGST;
  • Once ITC of IGST is exhausted, the ITC of CGST shall be used for payment of IGST;
  • If both ITC of IGST and ITC of CGST are exhausted, then only the dealer would be permitted to use ITC of SGST for payment of IGST.

Remaining IGST liability, if any, shall be discharged using payment in cash. GST System will ensure maintenance of this hierarchy for payment of IGST using the credit.


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