written by | May 9, 2022

What Are Interstate GST and Intrastate Supply Under GST?

The region of the provider, and the jurisdiction of the provided, decide whether we can categorise a supply as an intrastate or interstate GST. You should identify the service source to determine whether you should pay integral tax or state tax. The phrase "interstate supply of products" refers to the provision of commodities between two union territories or states. Intrastate product delivery, on either side, refers to items delivered in the same provinces or union territory as the provider. This article will cover an intrastate supply, an interstate supply and intrastate versus interstate.

Did you know?

Because of the different legal norms that come with it, the tax assessment system may be difficult for some to grasp. Various variables influence the supply of products or services under GST when it is implemented. Under GST, one of them is an intrastate supply and interstate supply. The taxpayer is responsible for paying GST independently of whether the goods & services are provided within the city or outside state lines. The government of India created the Good and Service Tax to revolutionise the country's taxation structure (GST). This is a huge step forward in the country's economic restructuring. It simplifies all prior taxes into one, resulting in a consistent taxation structure based on "One Market, One Tax."

Also Read: Time, Value & Place for Supply for Goods & Services under GST

GST Interstate vs Intrastate Supply Meaning

Understanding the concept of IGST (Integrated Good and Service Tax), CGST (Central good and Service Tax), and SGST (State Good and Service Tax) interstate supply vs intrastate supply is critical.

Interstate refers to the distance between two states, whereas intrastate refers to the distance inside a single state.

Interstate GST

When you supply products and services over the boundaries of two or more states or union territories, it is GST interstate supply. Only the IGST, not the CGST or SGST, is payable on interstate supplies, and the SEZ supplies are likewise included in the interstate GST (Special Economic Zone).

Intrastate GST

When you supply goods and services within a state, we refer to it as an intrastate supply in GST. The individual must pay both the CGST and the SGST in this case. This does not imply that the tax will be raised, and rather, it is the same as IGST and is shared evenly between CGST and SGST. The provider and the buyer in a GST intrastate supply are from the state.

What Is Interstate Supply?

The distribution of goods or services through one state is referred to as interstate supply under GST. The act GST defines interstate distribution as to where the supplier's location and customer's supply points are:

  • Two separate states
  • Two separate union territories;
  • A state as well as a union territory.

In addition to those mentioned above, interstate supply means the supply of commodities imported into India till they reach the customs station. Interstate supply also includes delivering products or services to or from a Special Economic Area operator or a Special Industrial Region unit.

When the provider and the place of supply are in different states, this is referred to as interstate supply. When products or services are transported or imported, or when items are provided to or by an SEZ unit, the transaction is deemed inter-state.

As defined by the act GST, interstate supply occurs when the supplier's location and a site of supply are in separate states. Interstate supply, meaning in GST, is the movement of products or services from one state to another. The taxpayer is responsible for paying the Integrated Good and Service Tax (IGST), which the government collects on interstate shipments. The supply of raw materials from Punjab to Delhi is an example of interstate supply.

Interstate Supply: Points to Remember

  • As defined by the GST Act, interstate supply is the movement of a product or service in a state and a union territory.
  • Products supplied to India are commonly referred to as interstate supply before they approach the customs post.
  • The conveyance of goods & services from or to the exclusive trade zones or from a particular development zone is known as interstate supplies.

Also Read: GST Input Tax Credit on Supply of Goods or Services

What Is Intrastate Supply?

An intrastate supply in GST is a provision of goods or services inside the identical state or union territory subject to GST. Intrastate GST would not apply to products or services provided to a special trade area operator or Special Economic Zone unit located within the state. Interstate supply means any provision of products or services to a Special Financial Zones operator or Special Economics Zone unit. When the supplier's region, as well as the location of supply, i.e., the buyer's area, both are in the same state, it's called intrastate supply in GST. In intrastate transactions, a seller must receive CGST and SGST from the consumer.

Intrastate supply, as defined by the act GST, happens when the supplier's location and the location of supply are both in the state. Intrastate supply, in basic terms, involves supplying products or services within a state's borders. The taxpayer must pay either the Central Good and Service Tax (CGST) or the States Good and Service Tax (SGST) on intrastate supplies (SGST). The Central Government collects the CGST, whereas the State Government collects the SGST. The supply of completed goods from Jawaharlal Place to Lajpat Nagar is an intra-state supply (within the Delhi border).

Intrastate Supply: Points to Remember

  • In intrastate supply, a seller should receive the State Good and Service Tax (SGST) and the Central Good and Service Tax (CGST) from a buyer.
  • This specifies that the supply is regarded as an intrastate supply if the supplier and buyer are situated inside the state.
  • The Central Government will get the Central Good and Service Tax (CGST), while the State Government will receive the State Good and Service Tax (SGST).

GST Interstate vs Intrastate Supply

Interstate sales are subject to the Integrated Good and Service Tax, or IGST, under the GST. Both the Central Good and Service Tax (CGST) and the State Good and Services Tax (SGST) apply to intrastate supplies (SGST). The GST rate for the products or services would stay the same in the case of intrastate supply. The GST rate and tax amount, on the other hand, will be split evenly between the two headings of SGST or CGST.

  • Under the GST, interstate supplies are subject to the Integrated Good and Service Tax, or IGST.
  • The CBT and the State Good and Service Tax apply to intrastate supplies (SGST).
  • For items and services sold inside the state, the GST rate would remain constant.
  • On the other side, the GST & tax rate will be split evenly between these two categories: SGST or CGST.
  • Under the existing GST law, various taxes are paid on different goods or services based on the supplier location.
  • If the transaction involves an intrastate supply of goods and services, the Center of Commerce collects the central GST (CGST), while the states where the supply occurs collect the state GST (SGST).

Conclusion

Intrastate GST is levied on goods and services supplied inside a single province or a union territory, while interstate GST is on goods and services provided between states. GST is India's tax measure that is most advantageous in terms of the short & long terms benefits and drawbacks.

To comprehend the meaning and basic distinction between intrastate supply and interstate supply in GST, we must first grasp the definition and basic difference between IGST or CGST and SGST/UTGST. Furthermore, a business owner must be aware of the elements that influence the provision of products or services under GST.

GST is India's most successful tax change, with several short- and long-term benefits. If you're having trouble calculating the GST amount, you may use the GST calculator based on the tax rates and supply. Intrastate supplies meaning is when a supply occurs when you provide products and services within a state.
Do you have issues with payment management and GST? Install the Khatabook App, a friend-in-need and one-stop solution for all issues related to income-tax or GST filing, employee management and more. Try it today!

FAQs

Q: What impact will the GST have on intra-state transactions?

Ans:

The central GST and state GST (SGST) would be levied concurrently on every intrastate GST transaction involving a taxable supply of goods and services. In addition, both would be advantageous. It is set at the same rate or value as Section 15 of the Central GST.

Q: What is the distinction between intrastate and interstate supplies?

Ans:

The IGST Act's Sections 7 and 8 define interstate and intrastate supplies. When the supplier's location and place of supply are both inside the same state, intrastate supplies occur, but interstate supplies occur in different states.

Q: How should we calculate the GST on intrastate billing in goods and services in another state?

Ans:

The tax is levied based on the type of supply. If you make the supply inside a state, the tax will be paid as CGST SGST, and if you make the supply between states, the tax is IGST.

Q: What GST taxes must I pay if I had an interstate product supply?

Ans:

In the case of an interstate GST of goods and services, the government deposit an integrated Good and Service Tax (IGST). CGST (Central GST) and SGST (SGST) would not be imposed in this situation.

Q: How should we calculate the GST on intrastate supplies meaning or billing in a separate state?

Ans:

Both the Central Good and Service Tax (CGST) and the State Good and Service Tax (SGST) apply to intrastate supplies (SGST). The GST rate for goods and services would stay unchanged. In contrast, the GST rate and tax amount will be evenly split between two headings: SGST or CGST.

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