IGST stands for Integrated Goods and Services Tax. It is a type of indirect tax that is imposed on the supply of goods and services in India. The tax is imposed by the central government and is collected by the state governments.
IGST is applicable on inter-state transactions of goods and services within India. In other words, it is imposed on the movement of goods and services from one state to another within the country. The tax is calculated based on the value of the goods or services and the GST rate applicable to them.
The implementation of IGST is aimed at eliminating the cascading effect of taxes, which was a major issue under the previous tax system. Under the previous system, taxes were imposed at multiple stages of the supply chain and this led to an increase in the cost of goods and services for consumers. With the implementation of IGST, the cascading effect of taxes is eliminated and this results in a reduction in the overall cost of goods and services for consumers.
It is important to note that GST (Goods and Services Tax) is a destination based tax, meaning that the tax is collected in the state where the goods or services are consumed. The GST collected in the state of consumption is then divided between the central and state government in a pre-determined manner.
IGST is also closely related to SGST (State GST) and CGST (Central GST) , where SGST is the tax collected by state government and CGST is collected by central government. IGST is the sum of SGST and CGST.
In summary, IGST is an indirect tax imposed on inter-state transactions of goods and services within India. It is aimed at eliminating the cascading effect of taxes and reducing the overall cost of goods and services for consumers. It is closely related to SGST and CGST, which are collected by the state and central governments respectively.