It is very important to understand the concepts of inter state supply and intra state supply as it has great significance under GST .
So why does this two concepts has a great significance under GST?
Under GST, the liability to pay the tax arises at the point of the supply and the place of the supply. The nature of the supply determines what tax is to be levied on the goods and services. If the supply of goods or services is intra state then CGST and SGST both are applicable and if the supply of goods or services is inter state then IGST is levied.
Now let’s understand what is inter state supply ?
When the supplier of goods or services is in one state and the recipient is in other state then such supply of goods or services is called as inter state of supply.
Thus, in simple words inter state supply means supply from one state to another .
Section 7 of the IGST act states the supplies which will be regarded as the inter -state supply they are as follows -:
Supply of goods or services where the location of the supplier and the place of supply are in two different states or in two different union territories or a state and union territory .
Supply of goods or services where the location of the supplier is in India and the place of supply is outside India.
Supply of goods imported in the territory of India, till they cross the customs frontier of India.
Supply of services imported into the territory of India.
Supply of goods or services to or by a SEZ developer or a SEZ unit.
Any supply of goods or services in the taxable territory not being an intra state supply and not covered above. ( example –: supply of goods or services from a state to a place or location to a place located in EEZ / continental shelf and vise versa)
Now what is Intra State Supply?
Intra state supply means when the supplier of the goods or services and when the supply of the goods is in the same state then such kind of supply is called as intra state supply.
In simple words supply of goods or services within the same state is known as the intra state supply.
Section 8 of the IGST act explains the supplies which will be regarded as the intra state supplies, they are as follows -:
Subject to the provisions of the section 10 , Supply of goods where the location of the supplier and the place of goods are in the same state or in the same union territory shall be treated as intra state supply:
Provided that the following supply of goods shall not be treated as intra state supply -:
Supply of goods to or by the special economic zone developer or a special economic zone unit,
Goods imported into the territory of India till they cross the customs frontier of the India , or Supplies made to a tourist referred to in section 15
Subject to the provisions of section 12 , supply of services where the location of the supplier and the place of supply of services are in the same state or same union territory shall be treated as intra state supply ,
Provided that the intra state supply of services shall not include supply of services to or by a special economic zone developer or a special economic zone unit .
Explanation 1. -:for the purpose of this act, where a person has :
An establishment in India and any other establishment outside India ,
An establishment in the state or union territory and any other establishment outside that state or union territory , or
An establishment in the state or union territory and any other establishment registered within that state or union territory then such establishments will be treated as the establishment of the distinct persons .
Explanation 2.-: A person carrying on a business through a branch or the agency or a representational office in any territory shall be treated as having an establishment in that territory.
Examples of the inter state supply and intra state supply -:
Suppose A living in Gujrat buys the car from the B person living in Maharashtra and asks him to deliver it to him in Gujrat then such kind of transaction is the example of inter state supply .
Now in the same example ,if both A and B are living in Gujrat or Maharashtra then such kind of transaction is the example of intra state supply.
To be more clear let’s take some more examples -:
Example no. 1-
Now Ravi is based in Ahmedabad he solicits the services of event management company based in New Delhi also he plans to have a destination wedding in Udaipur for his daughter.
Now the place of supply is Ahmadabad and the supplier is in New Delhi so the transaction is inter state supply and hence the IGST is applicable and even if the place of supply happens to be in Udaipur if destination wedding takes place. IGST would still be applicable as the transaction is inter state supply.
Example no. 2-
A is shifting from Nagpur to Mumbai so he hires the packers and movers for packing and relocation . Now here the place of supply is Nagpur because it is a transportation services. Hence here both CGST and IGST are applicable as it is assumed that the packers and movers are also from Nagpur so this kind of transaction is called as intra state supply.
So with the help of above given example now we have clear idea as to what is inter state supply and what is intra state supply .
3
4 The key points that differentiate between inter state supply and intra state supply are as follows -:
The inter state supply is business between two different states, union territory.
The intra state supply is the business that happens within the same state or same union territory .
IGST is applicable on the business transactions which are inter state.
CGST and SGST are applicable on the business transactions which are intra state.
PS. This article is just to explain the inter state supply and intra state supply in detail. If you want any expert advice regarding GST you can contact the experts at company vakil.
