{"id":12024,"date":"2024-07-26T18:51:28","date_gmt":"2024-07-26T13:21:28","guid":{"rendered":"https:\/\/razorpay.com\/learn\/?p=12024"},"modified":"2024-07-26T19:17:47","modified_gmt":"2024-07-26T13:47:47","slug":"what-is-igst","status":"publish","type":"post","link":"https:\/\/razorpay.com\/learn\/what-is-igst\/","title":{"rendered":"What is IGST (Integrated Goods and Service Tax)? Full Form, Meaning and Examples"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_80 counter-hierarchy ez-toc-counter ez-toc-transparent ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69e1a45a51856\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69e1a45a51856\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/razorpay.com\/learn\/what-is-igst\/#What-is-IGST\" >What is IGST?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/razorpay.com\/learn\/what-is-igst\/#When-is-IGST-Applicable\" >When is IGST Applicable?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/razorpay.com\/learn\/what-is-igst\/#How-to-Calculate-IGST\" >How to Calculate IGST?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/razorpay.com\/learn\/what-is-igst\/#IGST-Formula\" >IGST Formula<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/razorpay.com\/learn\/what-is-igst\/#IGST-Calculation-with-Example\" >IGST Calculation with Example<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/razorpay.com\/learn\/what-is-igst\/#Features-of-IGST\" >Features of IGST<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/razorpay.com\/learn\/what-is-igst\/#Benefits-of-IGST\" >Benefits of IGST<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/razorpay.com\/learn\/what-is-igst\/#Refund-of-IGST\" >Refund of IGST<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/razorpay.com\/learn\/what-is-igst\/#Points-to-Remember-About-IGST\" >Points to Remember About IGST<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/razorpay.com\/learn\/what-is-igst\/#FAQs\" >FAQs<\/a><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"What-is-IGST\"><\/span><b>What is IGST?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>IGST stands for Integrated Goods and Services Tax, a core component of the <a href=\"https:\/\/razorpay.com\/learn\/gst-goods-and-services-tax-guide\/\">Goods and Services Tax (GST)<\/a> framework. Specifically designed for interstate movement of goods and services.<\/p>\n<p><em><strong>Related Read: <a href=\"https:\/\/razorpay.com\/learn\/what-is-cgst\/\">What is CGST?<\/a><\/strong><\/em><\/p>\n<h2><span class=\"ez-toc-section\" id=\"When-is-IGST-Applicable\"><\/span><b>When is IGST Applicable?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>IGST is applicable when there is an inter-state supply of goods or services. This means that if a transaction involves the movement of goods or services from one state to another within India, IGST is charged.<\/p>\n<p>It also applies to imports and exports, ensuring that goods and services crossing state or national borders are taxed uniformly.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"How-to-Calculate-IGST\"><\/span>How to Calculate IGST?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>IGST is a combined tax levied on the supply of goods and services that move from one state to another within India. It&#8217;s a single tax that replaces multiple indirect taxes and is shared between the central and state governments.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"IGST-Formula\"><\/span>IGST Formula<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The formula for calculating IGST:<\/p>\n<p><strong>IGST = Value of Supply * IGST Rate<\/strong><\/p>\n<p><strong>Where,<\/strong><\/p>\n<ul>\n<li><strong>Value of Supply:<\/strong> This is the total value of the goods or services supplied.<\/li>\n<li><strong>IGST Rate:<\/strong> The applicable IGST rate varies depending on the nature of the goods or services.<\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"IGST-Calculation-with-Example\"><\/span><strong>IGST Calculation with Example<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Let&#8217;s say Delhi-based company, &#8216;Tech Gadgets&#8217;, sells a product worth Rs. 10,000 to a customer in Mumbai. The applicable IGST rate for the product is 18%.<\/p>\n<p><strong>Here,\u00a0<\/strong><\/p>\n<p>The Value of Supply is: Rs. 10,000<br \/>\nIGST Rate for the Product is: 18%<\/p>\n<p>= 10,000 * 18\/100<br \/>\n= Rs. 1,800<\/p>\n<p>Therefore, the total amount payable by the customer in Mumbai is Rs. 11,800 (Rs. 10,000 product value + Rs. 1,800 IGST).<\/p>\n<h3><strong>Breakdown of IGST Share<\/strong><\/h3>\n<p>The customer in Mumbai pays an IGST of Rs. 1,800, which is divided equally between the central and state governments. In this case, the Central Government (CGST) and the Maharashtra State Government (SGST) each receive Rs. 900.<\/p>\n<p><em><strong>Read More: <a href=\"https:\/\/razorpay.com\/learn\/what-is-sgst\/\">What is SGST?<\/a><\/strong><\/em><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Features-of-IGST\"><\/span><b>Features of IGST<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">IGST offers several distinct features that make it an effective tax mechanism:<\/span><\/p>\n<h3><b>1. Uniform Taxation<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Unlike CGST and SGST, which have varying rates across states, IGST has a single, unified tax rate set by the GST Council. This provides transparency and predictability for businesses operating across state borders.<\/span><\/p>\n<h3><b>2. Ease of Compliance<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Before IGST, interstate transactions required complex tax calculations and separate filings for central and state taxes. IGST simplifies this by requiring businesses to file a single return for all interstate supplies, reducing administrative costs and paperwork.<\/span><\/p>\n<h3><b>3. Enhanced Revenue Sharing<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">With IGST, the central and state governments share the tax revenue collected on interstate trade in a predetermined manner, fostering cooperation and ensuring both levels of government benefit from economic activity across the country.<\/span><b><\/b><\/p>\n<h3><b>4. Input Tax Credit (ITC) Mechanism<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">A key benefit for businesses, IGST allows the claiming of input tax credit (ITC). This means businesses can use the IGST paid on purchases to offset their IGST liability on future sales, reducing the overall tax burden and promoting a smooth flow of credit across the supply chain.<\/span><\/p>\n<h3><b>5. Facilitates Trade<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">IGST is exclusively applied to the supply of goods and services between different states in India, covering both Business-to-Business (B2B) and Business-to-Consumer (B2C) transactions.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Benefits-of-IGST\"><\/span><b>Benefits of IGST<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ul>\n<li><b>Simplifies Tax Structure: <\/b>By merging various taxes into one, IGST simplifies the overall tax structure.<\/li>\n<li><b style=\"color: #111111; font-family: Roboto, Arial, sans-serif;\">Reduces Tax Evasion: <\/b>A centralized system reduces the chances of tax evasion.<\/li>\n<li><b style=\"color: #111111; font-family: Roboto, Arial, sans-serif;\">Boosts Revenue Collection: <\/b>Ensures a steady flow of revenue to both central and state governments.<\/li>\n<li><b style=\"color: #111111; font-family: Roboto, Arial, sans-serif;\">Enhances Transparency: <\/b>The GST network (GSTN) makes the tax process transparent and efficient.<\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"Refund-of-IGST\"><\/span><b>Refund of IGST<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Refund of IGST is applicable in various scenarios, such as:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><b>Export of Goods and Services: <\/b><span style=\"font-weight: 400;\">Businesses exporting goods or services can claim a refund of IGST paid.<\/span><\/li>\n<li style=\"font-weight: 400;\"><b>Input Tax Credit:<\/b><span style=\"font-weight: 400;\"> Unutilized input tax credit can be claimed as a refund under certain conditions.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">To claim a refund, businesses need to file the appropriate forms on the <a href=\"https:\/\/www.gst.gov.in\/\" target=\"_blank\" rel=\"noopener\">GST portal<\/a> and comply with the necessary documentation requirements.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Points-to-Remember-About-IGST\"><\/span><b>Points to Remember About IGST<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">IGST is levied on inter-state transactions and imports.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The tax revenue is shared between the central and state governments.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Compliance with IGST regulations is essential for businesses involved in inter-state trade.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Timely filing of returns and accurate tax calculations ensure smooth business operations.<\/span><\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"FAQs\"><\/span><b>FAQs<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3><b>1. What is the full form of IGST?<\/b><\/h3>\n<p>The full form of IGST is Integrated Goods and Services Tax.<\/p>\n<h3><b>2. Who is required to register for IGST?<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Any business engaged in inter-state supply of goods or services needs to register for IGST.<\/span><\/p>\n<h3><b>3. Which government collects IGST?<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">The central government collects IGST, and the revenue is shared with the respective state governments.<\/span><\/p>\n<h3><b>4. What is an IGST refund under Rule 96?<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Rule 96 governs the refund of IGST paid on goods and services exported out of India.<\/span><\/p>\n<h3><b>5. Where can I check my IGST refund status?<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">You can check the IGST refund status on the GST portal using your login credentials.<\/span><\/p>\n<h3><b>6. Can IGST be claimed?<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Yes, IGST can be claimed as input tax credit and adjusted against output tax liability.<\/span><\/p>\n<h3><b>7. What is a refund under section 19 of IGST Act?<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Section 19 provides for the refund of unutilized input tax credits in certain cases, such as zero-rated supplies.<\/span><\/p>\n<h3><b>8. How is the IGST rate determined?<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">The GST Council determines the IGST rate based on the nature of goods or services.<\/span><\/p>\n<h3><b>9. Are there any exceptions to the IGST rate formula?<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Certain goods and services may have specific rates or exemptions as notified by the GST Council.<\/span><\/p>\n<h3><b>10. How do I find the current IGST rate for a specific product or service?<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">You can check the current IGST rate on the GST portal or consult the latest GST rate notifications issued by the government.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">By understanding IGST and its implications, businesses can ensure compliance and take advantage of the benefits offered by this tax system.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>What is IGST? IGST stands for Integrated Goods and Services Tax, a core component of the Goods and Services Tax (GST) framework. Specifically designed for interstate movement of goods and services. Related Read: What is CGST? When is IGST Applicable? IGST is applicable when there is an inter-state supply of goods or services. This means<\/p>\n","protected":false},"author":151156615,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3435],"tags":[2039,3409],"class_list":{"0":"post-12024","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-gst-tax-government","7":"tag-gst","8":"tag-igst"},"_links":{"self":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts\/12024","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/users\/151156615"}],"replies":[{"embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/comments?post=12024"}],"version-history":[{"count":4,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts\/12024\/revisions"}],"predecessor-version":[{"id":12050,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts\/12024\/revisions\/12050"}],"wp:attachment":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/media?parent=12024"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/categories?post=12024"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/tags?post=12024"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}