While going through GST, the Prima facie question that arise in everybody mind is What to tax i.e. Nature of tax to be paid, Whether SGST, CGST or IGST as these 3 type of taxes are leviable under GST.

All these taxes are leviable whenever there is a movement of Goods or services.

Now movement of Goods/Services are of 2 type:

  • Intra State i.e. With in state
  • Inter state i.e. Between two states

Here, Intra state movement of Goods/Services attract CGST and SGST both.

Whereas Interstate movement attracts IGST.

As GST is destination based tax ie. The goods/services will be taxed at the place where they are consumed and not at the origin, therefore the state where they are consumed will have the right to collect GST.

This in turn makes the concept of “PLACE OF SUPPLY” that defines whether the transaction will be counted as intra state or interstate and accordingly SGST, CGST and IGST will be levied.

Place of Supply In Case Of Goods Other Than Imported/Exported Goods

S. No. Nature Of Transaction Place Of Supply (POS) Relevant Section Example
1. Supply involves movement of goods Location of delivery of goods to the recipient. Sec.10(1)(a) of IGST Act,2017 Mr. Arvind of Ajmer, Rajasthan sells 50 laptop to Ms. Sweety of Jaipur, Rajasthan.

POS = Jaipur , Rajasthan

GST = SGST & CGST as its intra state transaction.

Mr. Arvind of Mumbai, Maharashtra sells 50 laptop to Ms. Sweety of Jaipur, Rajasthan

POS= Jaipur, Rajasthan

GST = IGST as it is interstate transaction.

2. Supply without movement of goods Location of goods at the time of delivery to the recipient. Sec. 10(1)(c) of IGST Act,2017 Ms. Sweety from jaipur purchases a laptop from an electronic store in New delhi. Sweety takes the delivery of the laptop in new delhi itself and brings it to jaipur in her own vehicle.

POS = New Delhi, as the location of laptop at the time of delivery.

GST = CGST & SGST

3. Assembly or Installation at site Place of assembly or Installation. Sec. 10(1)(d) of IGST Act,2017 Ms. Sweety purchases a Machinery to be installed in her new delhi office from a vendor in U.P.

POS = New Delhi  ie. Place of installation

GST = CGST & SGST

4. Supply on board a conveyance such as vessel, aircraft, train, motor vehicle etc. Location at which the goods were taken on board. Sec 10(1)(e) of IGST Act,2017 Mr. Arvind boards a flight from Mumbai to Jaipur and purchases a bottle of water in flight during the journey.

POS = Mumbai, Maharashtra as the items were loded into the plane at Mumbai.

GST = CGST & SGST

5. Supplier delivering to a recipient on direction of a 3rd person 3rd person principal place of business. Section 10(1)(b) Mr. Arvind of Mumbai, Maharashtra orders a Mobile Phone from Flipcart to be delivered to his friend Ms. Sweety in Jaipur as a gift. M/s Champion Computers (An online seller registered in New delhi) processes the order and send the mobile accordingly and Mr. Arvind is billed by Flipcart.

POS = Mumbai, Maharashtra ie. It will be assumed that buyer in Mumbai has received the goods.

GST = IGST

Author Bio

Qualification: CA in Practice
Company: C.R. Mehta & Co.
Location: KISHANGARH, Rajasthan, IN
Member Since: 31 Jan 2018 | Total Posts: 1

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2 responses to “What to Tax? CGST & SGST or IGST (A Big Question)”

  1. Akanksha saraf says:

    Such a nice article mam ,it will help alot
    Thanks

  2. Pulkit says:

    Very informative

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