The Integrated Goods and Services Tax Act, 2016 (IGST)

CA Deepak Aggarwal

Report of Sub-Committee-II on Model GST Law, 2016

Empowered Committee of State Finance Ministers

September, 2015

The Integrated Goods and Services Tax Act, 2016 (IGST)

• This act may be called the Integrated Goods and Services Tax Act, 2016.
• It extends to whole India.
• IGST applicable on all supplies of goods/services in the course of Inter-state trade or commerce. State includes Union Territory. However a supply of goods/services in the course of import in India shall be deemed to be an Inter-state supply.
• Supply of goods shall be deemed to take place in the course of Inter-state if the location of the supplier and the place of such supply are in different states.
• Supply of services shall be deemed to take place in the course of Inter-state if the location of the service provider and the place of supply of service are in different states.

• Place of supply of goods will be the location at which the goods are delivered / location of goods at the time of delivery to the receiver as the case may be. Here supply includes distance supply. Distance supply means a supply of goods to a recipient located in another state and the supplier arranges the transport of goods.
• Place of supply of goods in case of goods are assembler or installed at site shall be the place where such installation takes place. In case of goods are supplied on board a conveyance, the location at which goods are taken on board shall be the place of supply. In case of supply of gas, the location at which gas is used and consumed shall be the place of supply.
• Place of supply of services in case supply to a registered person, shall be the location of the service receiver. In case supply to a non registered person, location of the service provider will be the place of supply.
• Place of supply of services in relation to Immovable property including services by architects, interior decorators, estate agents etc. Or by way of lodging accommodation by a hotel, guest house, home stay, club including a boat house or by way of accommodation in any immovable property for organizing any marriage or reception or matters related, official, social, religious functions including services in relation to such functions will be the location of Immovable property or boat or vessel is located or intended to be located.
• Place of supply of services in relation to restaurant and catering services and services in relation to training, personal grooming, fitness, beauty treatment, health services including cosmetic and plastic surgery will be the location where the services are actually performed.
• Place of supply of services by way of admission to a cultural, sporting, educational or entertainment or amusement park or any other place or organization of a cultural,artistic, sporting event including supply of service in relation to a conference, fair, exhibition or similar events or sponsorship of any of the above events, shall be the place where the event is actually held.

• Place of supply of services by way of transportation of goods, including by mail or courier to a registered person, shall be the location of service receiver and in case of other persons, location at which such goods are handed over for their transportation.
• Place of supply of passengers transportation services shall be the place where the passengers embarks on the conveyance for a continued journey.
• Place of supply of services on board a conveyance such as vessel, aircraft, train or motor vehicle shall be the location of the first scheduled point of departure of that conveyance for the journey.
• Place of supply of banking and other financial services including stock broking services to any person shall be location of the service receiver on the records of the service provider. Provided that if the service is not linked to the account of the receiver, the place of supply shall be location of the service provider.
• Place of supply of telecommunication services including data transfer, broadcasting, cable and DTH television services to any person shall – in case of services by way of fixed line, cable or dish antenna, be the location where the installation has been done to receive services. – in case of mobile connection for telecommunication and internet services provided on post paid basis, be the location of billing address of the service receiver on record of the service provider. – in case where prepaid billing is followed, be the location where such payment or such vouchers are sold. Provided that if such pre-paid service is availed or the recharge is made through internet banking or other electronic mode of payment, the location of the service receiver on record of the service provider be the place of supply of such services.
• Every registered person will maintain a electronic cash ledger. Every deposit in the form of tax , interest , penalty, fees or any other amount shall be credited to this ledger.
• Every registered person will also maintain a electronic credit ledger. The self assessed input tax credit shall be credited to this ledger.
• The tax, interest , penalty, fees or any other amount payable shall be paid by debiting the electronic cash or credit ledger subject to such conditions and limitation and within such time as may be prescribed.
• If all the balance utilised in IGST payment, then credit of CGST may be utilised for payment under IGST. Also if all the credit available in CGST utilised then balance of credit in SGST account may be utilised in payment of IGST.
• Credit of CGST or SGST may be utilised only for the payment of tax dues under IGST. Tax dues shall mean the tax payable under this act and does not include interest, fee or penalty.
• The provision related to registration, valuation, time of supply of goods/services, exemption from payment of tax, input tax credit and all other matters will apply in this act as the apply in relation to levy of tax under the CGST Act,2016.
• A special provision related to levy of additional tax is also proposed in this act. This additional tax will be levied on any supply of taxable goods / services made in the course of inter-state trade or commerce by a taxable person, at a rate not exceeding 1% and for a period of 2 years or such other period, as may be notified. No credit will be allowed for the payment of additional tax. Such additional tax will be assigned to the state from where the supply of goods originates.

(Author can be reached at cadeepak@yahoo.com)