Interstate and Intrastate GST: Meaning, Rate, Examples, Differences

GST, or the Goods and Services Tax, was first introduced in India on July 1st, 2017. Interstate and intrastate GST are the most important components of GST as it helps one determine whether IGST, CGSST, or SGST is to be paid. Whether a supply is considered interstate or intrastate depends on the location of the supplier and the place of supply. This article presents a comparison between interstate and intrastate GST. It also provides a detailed explanation of interstate and intrastate meanings under GST law. 

Interstate Meaning in GST  

Interstate supply is where the goods or services provider is in a different state or Union Territory, and the place of supply is in a different state or Union Territory. The supplies involving import, export, or supply to or from a Special Economic Zone (SEZ) unit or Export-oriented Unit (EOU) are also considered interstate supplies. The Central Government levies integrated GST (IGST) on the interstate supply of goods and services in India.

When goods and services are supplied from one state to another, the IGST is levied by the central government and then distributed to the destination state. The revenue generated from IGST is shared between the central and state governments according to a predetermined formula. This ensures that the tax revenue is shared between the central and state governments and avoids the need for multiple taxes to be paid by businesses operating in different states. 

Intrastate Meaning in GST   

Intrastate supply is where the supplier of goods or services and the place of supply is within the same state. Intrastate supplies are liable to CGST (Central Goods and Services Tax) and SGST/UTGST (State Goods and Services Tax/Union Territory Goods and Services Tax). They are levied by the Central and State/UT governments, respectively.

The Intra-state GST rate varies depending on the type of good or service being supplied. The vendors need to collect both CGST and SGST from the customers in intrastate transactions. 

Interstate and Intrastate GST Rate With Examples  

The rates of GST on interstate and intrastate supplies depend on the goods or services being offered. The GST rates in India are divided into four slabs, i.e. 5%, 12%, 18%, and 28%. There are also special rates of GST for certain high-value goods as well as a Nil rate for certain essential goods. 

Now that you know the meaning of interstate supplies and intrastate supplies, let us understand how GST is calculated on them with the help of examples. 

Interstate GST Rate Example

A company ABC ltd is located in Jaipur, Rajasthan, and it supplies mobiles worth Rs.1,00,000 to Mumbai, Maharashtra. This supply will be considered an interstate supply. The goods supplied fall under the GST slab of 18%. IGST, or Integrated GST, is levied by the Central Government, a share of which is paid to the destination state. 

IGST Calculation: 1,00,000 * 18% = Rs.18,000

The dealer will charge Rs.18,000 as IGST. This amount is paid to the Centre and then split in a predetermined ratio between the Centre and the destination state, i.e. Maharashtra. 

As an exception, if the goods are supplied from Jaipur, Rajasthan, to a Special Economic Zone (SEZ) unit in Rajasthan, it will also be considered an interstate supply. All the goods and services supplied to or from an SEZ unit are considered interstate supplies. 

Intrastate GST Rate Example

ABC ltd. is located in Jaipur, Rajasthan supplies mobiles worth Rs. 2,00,000 to another entity located in Udaipur, Rajasthan. The GST is charged at 18%, which is apportioned as 9% CGST and 9% SGST. 

CGST/SGST calculation: Rs. 2,00,000 * 18% = Rs.36,000

Here, Rs. 18,000  is CGST and Rs. 18,000 is SGST.

The dealer collects Rs. 36,000. Out of this, Rs. 18,000 is paid as CGST to the Central Government, and Rs.18000 is paid to the Rajasthan Government. 

CGST/SGST  is levied by both the Central Government and the state government, respectively. However, the rate of CGST and SGST together sum up to the IGST rate levied. Hence, the total tax amount remains the same irrespective of whether it is an interstate or intrastate supply. The only difference lies in the levy.

Difference Between Interstate and Intrastate in GST  

Here is a tabular format that highlights the key differences between interstate GST and intrastate GST in India:

Overall, Interstate GST and Intrastate GST are two different types of GST in India that are applied depending on the location of the supplier and the place of supply. The key difference between the two lies in the levy of the tax.

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GST State Code List
GST Number Search