FAQ on IGST under Goods and Service Tax Law (GST)

Q 1. What is IGST?

Ans. “Integrated Goods and Services Tax” (IGST) means tax levied under the IGST Act on the supply of any items and/ or services in the course of inter-State trade or commerce.

Q 2. What are inter-state supplies?

Ans. A supply of items and/or services in the course of inter-State trade or commerce suggests any supply where the place of the supplier and the place of supply are in various States. (Section 3( 1) and 3( 2) of the IGST Act)

Q 3. How will the Inter-State supplies of Goods and Services be taxed under GST?

Ans. IGST shall be imposed and gathered by Centre on inter-state materials. IGST would be broadly CGST plus SGST and shall be levied on all inter-State taxable products of items and services. The inter-State seller will pay IGST on value addition after changing readily available credit of IGST, CGST, and SGST on his purchases. The Exporting State will move to the Centre the credit of SGST used in payment of IGST. The Importing dealership will declare credit of IGST while releasing his output tax liability in his own State. The Centre will move to the importing State the credit of IGST used in payment of SGST. The pertinent info is likewise submitted to the Central Agency which will act as a clearing house system, verify the claims and notify the particular governments to transfer the funds.

Q 4. What are the significant features of the draft IGST Law?

Ans. The draft IGST law includes 33 areas divided into 11 Chapters. The draft, inter alia, sets out the rules for determination of the location of supply of items. Where the supply involves motion of items, the place of supply will be the place of goods at the time at which the motion of goods terminates for delivery to the recipient Where the supply does not include movement of items, the place of supply shall be the location of such products at the time of shipment to the recipient In the case of items put together or set up at site, the place of supply shall be the location of such setup or assembly. Finally, where the goods are supplied on board a conveyance, the location of supply shall be the place at which such products are taken on board.

Q 5. What are the advantages of IGST Model?

Ans. The significant advantages of IGST Model are:

• a. Maintenance of undisturbed ITC chain on inter-State transactions;-LRB- .
• b. No in advance payment of tax or significant clog of funds for the inter-State seller or buyer;-LRB- .
• c. No refund claim in exporting State, as ITC is used up while paying the tax;-LRB- .
• d. Self-monitoring model;-LRB- .
• e. Ensures tax neutrality while keeping the tax regime easy;-LRB- .
• f Simple accounting with no additional compliance problem on the taxpayer;-LRB- .
• g Would facilitate in ensuring high level of compliance and thus greater collection efficiency. Model can handle ‘Business to Business’ as well as ‘Business to Consumer’ deals.

Q 6. How will imports/exports be taxed under GST?

Ans. All imports/exports will be considered as inter-state products for the functions of levy of GST (IGST). The occurrence of tax will follow the location concept and the tax earnings in case of SGST will accumulate to the State where the imported goods and services are taken in. Full and complete set-off will be offered as ITC of the IGST paid on import on products and services. (Section 2( c) of the IGST Act).

Q 7. IGST Act is very little with extremely few definitions and major part dealing with settlement commissioner. Whether provisions in CGST or SGST Act will apply to IGST Act?

Ans. Yes, Section 27 of the IGST Act offers that different provisions as discussed therein shall use under IGST Act as they use in relation to impose under the CGST Act.

Q 8. How will the IGST be paid?

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

• First available ITC of IGST shall be used for payment of IGST;-LRB- .
• Once ITC of IGST is exhausted, the ITC of CGST will be utilized for payment of IGST;-LRB- .
• If both ITC of IGST and ITC of CGST are tired, then only the dealer would be allowed to utilize ITC of SGST for payment of IGST.

Remaining IGST liability, if any, will be discharged utilizing payment in cash. GST System will guarantee upkeep of this hierarchy for payment of IGST utilizing the credit

Q 9. How will the settlement in between Centre, exporting state and importing state be done?

Ans. There would be settlement of account between the centre and the states on two counts, which are as follows

• Centre and the exporting state: The exporting state shall pay the amount equal to the ITC of SGST used by the provider in the exporting state to the Centre.
• Centre and the importing state: The centre will pay the amount equivalent to the ITC of IGST utilized by a dealership for payment of SGST on intra- state supplies.

The settlement would be on cumulative basis for a state taking into account the information provided by all the dealer in the settlement period. Comparable settlement of quantity would likewise be undertaken between CGST and IGST account.

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