Interstate and Intrastate GST, Meaning, Rate, Key Difference

Q: What is intrastate and interstate GST?

Intrastate GST is applied when the buyer and seller are in the same state, while interstate GST is applied when they are in different states.

Q: What is IGST with an example?

IGST (Integrated GST) is levied on interstate transactions; for example, if goods are sold from Delhi to Maharashtra, IGST is charged.

Q: Who collects interstate GST?

The Central Government collects IGST and later distributes the share to the destination state.

Q: Is Intrastate GST a central tax?

Intrastate GST includes both Central GST (CGST) and State GST (SGST), so only part of it is a central tax.

Q: What is interstate GST?

Interstate GST refers to IGST, which is levied on the supply of goods and services between different states.

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Interstate and Intrastate GST both have an important role in the Indian Economy especially for the MSME Sector. The MSME sector companies that are planning to operate in multiple states, this distinction between the interstate and intrastate GST can help them understand the impact of tax rates and the compliance procedure. In this article, we are going to cover the difference in between Interstate and Intrastate GST.

Interstate Supply GST

Interstate GST Supply means the transactions that take place in between two different states or Union Territories. These GST transactions can be collected by the central government since they fall under the integrated GST category. IGST is especially beneficial for the small businesses conducting business across state borders, as IGST enables them to pay under a single levy instead of going through the procedure of paying multiple taxes. This collected tax gets split in between the central and the state government, ensuring fair and effective revenue distribution.

Intrastate Supply GST

Intrastate GST Supply refers to GST that is levied when both the business as well as the place of supply both are located in the same state. Intrastate GST is collected separately by the state and the central government in the form of CGST and SGST. Since the state has the power to decide the rate of State GST, these tax costs vary depending on the state.

Difference in between Interstate and Intrastate GST Supply

Here is a difference in between Interstate and Intrastate GST Supply:

Parameters	Interstate GST	Intrastate GST
Tax Applicability	Applies to transactions where the supplier and the place of supply are in different states.	Pertains to transactions where the supplier and the place of supply are within the same state.
Tax Levied By	The tax is levied solely by the Central Government.	Both the Central and State Governments impose taxes.
Tax Rate	Integrated Goods and Services Tax (IGST) is applied to the transaction.	The tax is split into Central Goods and Services Tax (CGST) and State Goods and Services Tax (SGST).
Destination State’s Share	The destination state receives a share of the IGST collected.	The entire amount of SGST collected remains with the same state.
Place of Supply	The place of supply is in a different state than the supplier’s location.	The place of supply remains within the same state as the supplier.
Input Tax Credit (ITC) Utilization	IGST credit can be used to offset IGST, CGST, or SGST liabilities.	CGST and SGST credits can only be used to offset their respective tax liabilities.