IGST stands for Integrated Goods and Services Tax. It is a type of GST applied on inter-state transactions of goods and services within India, as well as on imports. When a supplier in one state sells goods or provides services to a buyer in another state, IGST is levied instead of CGST and SGST.
Under the IGST system, the tax is collected by the Central Government and later distributed between the Centre and the respective state where the goods or services are consumed. This ensures a seamless flow of credit across states and helps avoid double taxation.
For businesses, IGST is especially relevant during GST filings, inter-state sales, e-commerce operations, or when importing goods and services. It is important for business owners to charge IGST correctly and claim input tax credit (ITC) where applicable. Failing to comply can lead to penalties or delays in refunds.
Proper understanding of IGST is crucial during GST registration, monthly returns filing (such as GSTR-1 and GSTR-3B), and while preparing invoices for out-of-state clients. For more guidance on GST-related solutions and compliance support, you can visit FinTax24’s GST services.
In summary, IGST plays a vital role in managing tax for inter-state and import transactions and is an essential concept for any business operating across state borders in India.