The full form of IGST is the Integrated Goods and Services Tax. Taxes imposed on interstate purchases or supplies of taxable services and goods and imports of services and goods fall under the GST category. IGST is collected by the Central Government and then distributed to each state according to its need.
IGST is paid when a commodity or service moves from one state to another. The tax is split between the federal and state governments. The state makes compromises with the federal government and not with other governments to resolve the interstate tax amounts.
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Characteristics of IGST
The GST Act governs IGST charges. According to the IGST Act, the Centre would charge IGST, which is made up of CGST + SGST, on all interstate payments for taxable supplies. The federal government will impose the tax, and it will be divided between the union and the states by parliamentary legislation, largely based on recommendations by the Goods and Services Tax Council.
- The demand for products and services between states is legitimate.
- It implies that the SGST portion of the IGST Tax is given to the state that consumes it.
- Transparency of the input tax credit supply chain for interstate supplies is preserved.
- The 1956 Central Sales Tax (CST) Act was repealed.
- Imported goods and services are also included under integrated GST. The fundamental tenet is that any transportation of goods or services during the importation into the union of India is regarded as an interstate exchange or exchange supply and, as a result, is subject to IGST.