FAQs on Integrated Goods and services tax Act 2017

Question 1

1. What is the Integrated Goods and Services Tax (IGST) and why was it introduced in India?

Accepted Answer

Ans. The Integrated Goods and Services Tax (IGST) is a tax that is levied on the supply of goods and services where the supply involves a cross-border transaction between states or Union Territories in India. It was introduced as part of the Goods and Services Tax (GST) regime in India on July 1, 2017, to simplify the taxation process, eliminate the issues of double taxation, and create a unified tax structure across the country. IGST is designed to ensure that the GST system functions seamlessly across state lines, facilitating easier movement of goods and services.

Question 2

2. How is IGST calculated on inter-state transactions?

Accepted Answer

Ans. IGST is calculated on the value of the supply of goods or services at the applicable IGST rate. The rate is generally the same as the sum of the Central Goods and Services Tax (CGST) and the State Goods and Services Tax (SGST) applicable to a similar intra-state supply. For example, if the CGST and SGST rates are both 9%, the IGST rate would be 18%. The seller of the goods or services collects the IGST from the buyer and then pays it to the government.

Question 3

3. Who is responsible for paying IGST in inter-state transactions?

Accepted Answer

Ans. In inter-state transactions, the supplier (seller) of goods or services is responsible for collecting the IGST from the recipient (buyer) at the time of supply. The supplier must then remit the collected IGST to the government. For imports, the importer is responsible for paying the IGST, which is calculated on the value of the imported goods plus any applicable customs duties.

Question 4

4. Can businesses claim input tax credit for IGST paid?

Accepted Answer

Ans. Yes, businesses can claim input tax credit (ITC) for the IGST paid on purchases made for business purposes. The ITC can be used to offset the output tax liability when they supply goods or services. However, businesses need to ensure that they comply with the provisions set out in the IGST Act and maintain proper documentation to support their ITC claims.

Question 5

5. What are the penalties for non-compliance with IGST regulations?

Accepted Answer

Ans. Penalties for non-compliance with IGST regulations can include fines, interest on delayed payment, and even imprisonment for serious offenses such as tax evasion. The specific penalty amounts can vary based on the nature and severity of the violation, but it is crucial for businesses to adhere to the IGST rules and regulations to avoid these repercussions.

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