GST Interstate vs GST Intrastate
5paisa Research Team
Last Updated: 09 May, 2025 12:43 PM IST

Content
- Understanding Interstate and Intrastate GST
- What is Interstate GST?
- What is Intrastate GST?
- Differences Between Interstate and Intrastate GST
- Impact on Businesses
- Conclusion
The introduction of the Goods and Services Tax (GST) on 1st July 2017 marked a transformative shift in India's taxation system. By consolidating multiple indirect taxes into one, GST streamlined tax collection, improved compliance, and reduced tax cascading. However, an essential distinction within GST is between Interstate GST (IGST) and Intrastate GST (CGST + SGST). Understanding the difference between these two categories is crucial for businesses to ensure accurate tax computation, seamless compliance, and efficient tax credit utilisation.
This article explores the meaning, applicability, rates, and key differences between Interstate GST and Intrastate GST, ensuring clarity for business owners, accountants, and tax professionals.
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Frequently Asked Questions
Yes, businesses can claim Input Tax Credit (ITC) on IGST paid for interstate purchases. This ITC can be used to offset IGST, CGST, or SGST liabilities in a specific order as per GST rules.
If the place of supply is different from the supplier’s location, IGST applies. However, if billing and delivery happen within the same state, CGST and SGST are levied, regardless of the supplier’s state.
An e-commerce seller must charge IGST for interstate supplies and CGST & SGST for intrastate supplies. The GST treatment depends on the buyer’s location and the place of supply.
For services, the place of supply determines whether IGST or CGST & SGST are applicable. If the recipient is in another state, IGST applies; if within the same state, CGST and SGST are charged.
If IGST is charged instead of CGST & SGST (or vice versa), businesses must rectify it in their GST returns. Incorrect tax collection can lead to compliance issues and difficulty in claiming ITC.