GST glossary
IGST
Integrated Goods and Services Tax
IGST is the GST charged on a sale from one state to another, on imports, and on supplies to SEZ units. It is charged at the full rate, for example 18%, collected by the centre, and the state's share is passed to the state where the supply is consumed.
Why it matters to your business
Almost every business that sells outside its home state charges IGST. It keeps GST seamless across India: your customer in another state claims the IGST you charge as credit, and the tax reaches the state where the goods are used. Getting the choice between IGST and CGST plus SGST wrong means paying the tax again under the right head and asking the customer to wait for a corrected invoice.
How it works
As of September 2026:
- The place of supply decides the tax. For goods it is usually where the movement ends; for most services to a registered customer it is the customer’s location.
- If the place of supply is in another state, charge IGST at the full rate.
- IGST paid on purchases and imports becomes input tax credit and is used first against IGST.
- Goods moving between states usually need an e-way bill when the value is above ₹50,000.
An example
You are a distributor in Ahmedabad and sell goods worth ₹10,000 at 18% to a dealer in Jaipur. Gujarat and Rajasthan are different states, so the invoice shows IGST of ₹1,800 and a total of ₹11,800. The same sale to a dealer in Surat would show ₹900 CGST and ₹900 SGST.
Common mistakes
- Using the billing address instead of the delivery address as the place of supply for goods.
- Charging CGST and SGST to an SEZ unit in your own state. Supplies to an SEZ are always inter-state.
- Leaving IGST credit unused while paying CGST or SGST from other credit.
Questions about IGST
When is IGST charged?
When the supplier's state and the place of supply differ, on imports of goods and services, and on supplies to SEZ units and developers. Exports are zero-rated and can be made with IGST (claimed back as a refund) or without it under a Letter of Undertaking.
What are the IGST rates?
The full GST rate on the item. Since 22-09-2025 the main rates are 5% and 18%, with 40% on a short list of goods. IGST equals CGST plus SGST on the same item.
In what order is IGST credit used?
IGST credit is used first to pay IGST, and the balance then pays CGST and SGST in either order. You must use up IGST credit before using CGST or SGST credit.
Is a transfer to my own branch in another state liable to IGST?
Yes. Each GSTIN is a separate taxable person, so a transfer between your branches in two states is a supply that needs a tax invoice with IGST.
Updated .