IGST and Inter-State Supply Mechanics
This domain tests when a supply is inter-State or intra-State, how IGST is levied and collected, zero-rating, and deemed inter-State supplies.
Nature of supply
Section 7 of the IGST Act deems a supply inter-State where the location of the supplier and the place of supply are in different States or Union Territories. Section 7(5) deems inter-State: import of goods or services into India, and supply to or by a Special Economic Zone unit or developer. Section 8 treats supplies within the same State or Union Territory as intra-State, attracting CGST and SGST.
Levy and collection
Section 5 levies IGST on inter-State supplies. The Central Government collects IGST and apportions it between the Union and the States under Article 269A on the recommendation of the GST Council. The taxable event, value, time of supply and exemptions follow the CGST framework, with place of supply determined under IGST Act sections 10 to 13.
Zero-rated supply
Section 16 zero-rates exports and supplies to SEZ units or developers, either under bond or letter of undertaking without payment of IGST, or on payment of IGST with refund. Refund claims must satisfy rule 89 or rule 96 requirements.
Worked example
A Maharashtra supplier invoices a Delhi buyer but delivers goods in Maharashtra without movement across States. Under section 10(1)(c), the place of supply is the location of goods at delivery, Maharashtra. The supply is intra-State, so CGST and SGST apply, even though the invoice address is Delhi.
Traps
- Treating the billing address as the place of supply.
- Forgetting that SEZ supplies are deemed inter-State.
- Claiming zero-rated refund without matching shipping bill or LUT details.