Within the Goods and Services Tax (GST) framework, the categorization of a supply as intra-state or inter-state hinges upon the respective locations of the supplier and the recipient. This categorization is pivotal in deciding the tax liability, whether it involves integrated tax or a blend of central and state taxes. To simplify, “inter-state supply” pertains to transactions occurring between parties situated in different states or union territories, whereas “intra-state supply” involves transactions where both parties are located within the same state or union territory.
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What is Inter-State Supply under GST?
An inter-state supply occurs when the supplier’s location and the place of supply are in different states. This also includes situations where goods or services are exported, imported, or provided to or from Special Economic Zones (SEZs). In these cases, integrated GST (IGST) is levied.
What is Intra-State Supply under GST?
An intra-state supply happens when the supplier’s location and the place of supply are in the same state. This triggers both Central GST (CGST) and State GST (SGST). The vendor collects both taxes from the customer, with CGST going to the central government and SGST to the state government.
Key Points for Inter-State Supply under GST
- Inter-state supply includes the transportation of goods or services across state or union territory boundaries.
- Goods imported into India are considered an inter-state supply until they reach a customs station.
- Supplies to or from SEZs or Exclusive Economic Zones are also inter-state.
Key Points for Intra-State Supply under GST
- Both CGST and SGST are collected on intra-state supply.
- The supply must occur within the same state or union territory.
- The CGST is deposited with the central government, while SGST is paid to the state government.
Intra-State GST vs. Inter-State GST
- Intra-state transactions incur both CGST and SGST, while inter-state transactions incur IGST.
- The total GST rate remains the same for intra-state supply, but it is split evenly between CGST and SGST.
- Inter-state transactions have an IGST rate, which is equivalent to the sum of CGST and SGST rates.
Frequently Asked Questions (FAQs) on Intra-State and Inter-State Supply Under GST
1. How is GST calculated for intra-state supplies with billing in different states?
Intra-state supplies are subject to both CGST and SGST, with the GST rate and tax amount split evenly between the two.
2. What GST taxes are due for the inter-state supply of products?
Interstate supplies incur IGST, collected by the central government. CGST and SGST are not applicable.
3. What’s the difference between inter-state and intra-state supplies?
Intra-state supplies occur within the same state, while inter-state supplies happen across different states or union territories.
4. How does GST affect intra-state transactions?
CGST and SGST are imposed simultaneously on intra-state supplies, based on the same value or price, by Section 15 of the CGST Law.
5. How are inter-state transactions taxed?
Inter-state supplies are taxed with IGST, based on the same price or value, calculated per Section 15 of the CGST Law.
Conclusion
Understanding the distinction between intra-state and inter-state supply is critical for accurate GST returns. While intra-state transactions incur both CGST and SGST, inter-state transactions require IGST. This differentiation forms the backbone of the GST system, ensuring appropriate revenue distribution and compliance with tax regulations.
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