IGST (Integrated GST)

IGST or Integrated GST is a tax levied under the GST Act on the supply of goods or services between two different states or from one state to another (inter-state supplies). It is also applicable on imports into India. Under IGST, the tax is collected by the exporting state but the revenue is assigned to the importing state — this is called the destination-based principle. When a dealer in Maharashtra sells goods to a dealer in Karnataka, the transaction attracts IGST at the applicable rate. The Central Government collects the IGST and then distributes the state share to the destination state. For inter-state movement of goods, the GST Council has prescribed specific rates — currently 0%, 5%, 12%, 18%, and 40% after the 56th Council meeting. IGST prevents double taxation and ensures seamless credit flow across state borders, making it simpler for businesses operating pan-India compared to the old excise-and-VAT system.