IGST: Overview of the IGST Bill, what’s IGST?. IGST Act, 2017 governs Integrated Goods & Services Tax, which is levied and picked up by the Centre on inter-state supply of products and services including imports into India and supplies made outside India along side supplies to / from SEZs.

IGST: Overview of the IGST Bill

What is IGST?

The Integrated Goods and Services Tax Act, 2017 [IGST] was gone by the Parliament for levy and collection of tax on inter-state supply of products or services or both by the Central Government and for matters connected therewith or incidental thereto.

The Union Government presented the Integrated Goods and repair bill , 2017 in Lok Sabha and it had been gone by an equivalent on 29th March, 2017. The Rajya Sabha passed the bill on 6th April, 2017 and was assented to by the President on 13th April, 2017.

INTEGRATED GOODS & SERVICES TAX ACT, 2017

IGST is levied and picked up by the Centre on inter-state supply of products and services. Under Article 269A of the Constitution, IGST on supplies within the course of inter-state trade or commerce is levied and picked up by the govt of India and such tax shall be apportioned between the Union and therefore the States within the manner as could also be provided by Parliament by law on the recommendations of the products and Services Tax Council. IGST paid is out there as credit to line off against the payment of IGST, CGST and SGST sequentially on output supplies

IGST (Integrated Goods & Services Tax) Act, 2017 deals with supplies interstate, import into India and supplies made outside India. the subsequent table illustrates an equivalent .

IGST is applicable everywhere India including the state of Jammu & Kashmir

As per section 5 of IGST Act, 2017 a maximum rate of 40% maybe imposed on interstate supply of products and/ or services.

A “Dual GST” model has been adopted in sight of the federal structure of our country. Centre and States simultaneously levy GST on every supply of products or services or both which, takes place within a State or Union Territory. Thus, there are two components of GST:

Relevance of IGST

Before discussing the IGST Model and its features, it’s important to know how inter state trade or commerce is being regulated within the present tax system. it’s significant to notice that earlier the Central nuisance tax Act, 1956 regulated the inter-state trade or commerce (hereinafter mentioned as “CST”), the authority that was constitutionally derived from Article 269 of the Constitution. Further, as per Article 286 of the Constitution of India, no State could levy nuisance tax on any sales or purchase of products that happened outside the State or within the course of the import of the products into, or export of the products out of the territory of India. Only the Parliament could levy tax on such a transaction.

The Central nuisance tax Act was enacted in 1956 to formulate principles for determining when a purchase or purchase of products takes place within the course of inter-state trade or commerce. The Act also provided for the levy and collection of taxes on sales of products within the course of inter-State trade. However, CST was collected and retained by the origin State, which was an aberration. Any tax , by definition, may be a consumption tax, the incidence of which, is borne by the buyer . Logically, the tax must accrue to the destination State having jurisdiction over the buyer .

Input decrease (hereinafter mentioned as ITC) of CST wasn’t allowed to the customer which, resulted in cascading of tax (tax on tax) within the supply chain.

Moreover, various accounting forms were required to be filed in CST viz., C Form, E1, E2, F, I, J Forms etc. which added to the compliance cost of the business and impeded the free flow of trade.

The IGST model was brought in to get rid of all such deficiencies. IGST may be a mechanism to watch the inter-State trade of products and services and make sure that the SGST component accrues to the buyer State. It maintains the integrity of ITC chain in inter-State supplies. The IGST rate is broadly adequate to CGST rate plus SGST rate. IGST would be levied by the Central Government on all inter-State transactions of taxable goods or services.