Inter state supplyand Intra state suppl
Introduction to GST:
- GST is an indirect tax or consumption tax that is levied on the supply of goods or services or both.
- To collect GST, supplies are categorized as Inter-State supplies, which mean goods coming from one State to another, and intra-State supplies which suggest products in the State.
- The Central Government charges the consolidated tax by the GST Act of 2017 in the inter-state supplies, while the Central Government charges the fee following the GST Act, 2017 in the case of intra-State supplies and the state tax under the SGST law of 2017.
What is Inter-state supply?
Under GST, the supply of goods or services from one state to another would be called interstate supply. The GST Act defines interstate supply as when the location of the supplier and the place of supply for the customer are in:
- Two different States; or
- Two different Union territories; or
- State and a Union territory.
In addition to the above, the supply of goods imported into India, till they cross the customs station is also classified as interstate supply. Also, the supply of goods or services to or by a Special Economic Zone developer or a Special Economic Zone unit is classified as interstate supply.
What is Intra-state supply?
Under GST, the supply of goods or services within the same state or Union territory is called an intrastate supply. However, the supply of goods or services to a Special Economic Zone developer or Special Economic Zone unit situated within the same state would not be intrastate supply. As any supply of goods or services to a Special Economic Zone developer or Special Economic Zone unit is classified as interstate supply.
GST Interstate vs Intra state supply
Under GST, interstate supply attracts Integrated Goods and Services Tax or IGST. Intrastate supply attracts both Central Goods and Services Tax (CGST) and State Goods and Services Tax (SGST). In the case of intrastate supply, the GST rate for the goods or services would remain the same. However, the GST rate and tax amount shall divide equally into two heads namely SGST and CGST.
Why should tax be differentiated in supply?
- Four forms of taxes under the GST system, i.e., CGST, SGST, UTGST, and IGST.
- When an intra-State distribution is decided, CGST and SGST / UTGST are charged and payable, while IGST is chargeable and payable in international supply.
- It is therefore well established that different taxes are to be paid on the corresponding supplies. The determination of supply for intra-State and inter-State supplies is becoming more important.
To know the applicability of IGST or CGST and SGST/UTGST, we need to understand the meaning and basic difference between intrastate and interstate supply. Moreover, a business owner needs to know the factors impacting the supply of goods or/and services under GST. If you have any doubt regarding this, you can contact company suggestion.