Module 08

The Integrated Goods and

Services Tax Act, 2017
Adv. Mahesh Tak
Nature of IGST under the IGST Act, 2017

• Integrated Levy

• IGST is a composite levy of both Central GST (CGST) and State GST (SGST) on inter-State
supplies.

• Instead of levying separate CGST and SGST, IGST is charged as a single tax.

• Destination-Based Tax

• IGST follows the destination principle → revenue accrues to the State where the
goods/services are consumed, not where they originate.
• Applicable on Inter-State Transactions

• Levied on:

• Inter-State supply of goods/services.

• Imports (treated as inter-State supply).

• Supplies to/from Special Economic Zones (SEZs).

• Administered by the Centre

• Collected by the Central Government.

• Later, the tax is apportioned between the Centre and the consuming State/UT.
• Facilitates Seamless Input Tax Credit (ITC)

• Ensures smooth flow of ITC across States.

• IGST paid on inter-State supply can be adjusted against IGST, CGST, or SGST liabilities.

• Neutral to Trade

• Removes cascading of taxes.

• Provides a level playing field by ensuring equal treatment of local and inter-State supplies.

Example

• A trader in Maharashtra sells goods worth ₹10 lakh to a dealer in Karnataka.

• IGST @18% = ₹1.8 lakh is charged.

• This amount goes to the Central Government, which then transfers Karnataka’s share to it.
Object of IGST
• To levy and collect tax on inter-State supplies of goods and services.

• To ensure seamless flow of credit and avoid cascading effect of taxes.

• To adopt a destination-based taxation system where tax revenue goes to the State where
goods/services are consumed.
• To facilitate a unified national market by removing barriers like CST, entry tax, and check-
post delays.
Scope of IGST

• Levy on Inter-State Transactions

• Applicable on supply of goods or services between two States or Union Territories.

• Imports & Exports

• Imports are treated as inter-State supply and IGST is levied along with customs duty.

• Exports and supplies to SEZ are considered zero-rated supplies, ensuring competitiveness
in global trade.

• Supplies to SEZ Units/Developers

• Always treated as inter-State supply, even if located within the same State.
• Input Tax Credit (ITC) Utilization

• IGST credit can be set off against IGST, CGST, or SGST liabilities (in that order).

• Apportionment of Revenue

• IGST collected by the Centre is apportioned between the Central Government and the
consuming State.
CHAPTER IV DETERMINATION
OF NATURE OF SUPPLY
Section 7 Inter-State supply.

It defines what constitutes an inter-State supply of goods and services. Understanding this section is important for
determining the applicability of IGST and ensuring compliance with GST regulations.

(1) Supply of Goods & Services:

• Subject to the provisions of section 10 (which deals with the place of supply of goods), a supply of goods is
considered an inter-State supply when the location of the supplier and the place of supply are in:

a) Two Different States: For example, if a supplier is located in Maharashtra and the goods are supplied to a
recipient in Karnataka, it is an inter-State supply.

b) Two Different Union Territories: If the supplier is located in Delhi and the goods are supplied to a recipient in
Puducherry, it is an inter-State supply.

c) A State and a Union Territory: If the supplier is located in Gujarat and the goods are supplied to a recipient in
Chandigarh, it is an inter-State supply.
Import of Goods:

• The supply of goods imported into India is treated as an inter-State supply until they cross the
customs frontiers of India. This means that IGST is levied on imported goods at the point of
import.

Import of Services:

• The supply of services imported into India is treated as an inter-State supply. This means that
IGST is levied on imported services under the reverse charge mechanism, where the recipient of
the service in India is liable to pay the tax.
(5) Other Scenarios:

• The following supplies of goods or services or both are also treated as inter-State supplies:

• (a) Exports: When the supplier is located in India and the place of supply is outside India, it is considered an export
and is treated as an inter-State supply. Exports are generally zero-rated under GST, meaning that no tax is levied on
them, but the supplier can claim a refund of any input tax credit.

• (b) Supplies to or by SEZ Units or Developers: Supplies of goods or services to or by a Special Economic Zone (SEZ)
developer or a Special Economic Zone unit are treated as inter-State supplies. This is to provide certain benefits
and incentives to SEZ units and developers.

• (c) Supplies Not Covered Elsewhere: Any supply of goods or services or both in the taxable territory that is not an
intra-State supply (i.e., a supply where the location of the supplier and the place of supply are in the same State or
Union territory) and is not covered elsewhere in this section is treated as an inter-State supply. This is a residual
clause to ensure that all supplies are classified as either intra-State or inter-State.
Section 8 Intra-State Supply

• (1) Subject to the provisions of section 10, supply of goods where the location of the supplier and the
place of supply of goods are in the same State or same Union territory shall be treated as intra-State
supply:

• This clause establishes the fundamental rule for determining whether a supply of goods qualifies as an
Intra-State supply. If both the supplier's location and the place where the goods are supplied are
within the same State or Union Territory, it is generally considered an Intra-State supply. Section 10
provides further guidance on the place of supply for goods.

Provided that the following supply of goods shall not be treated as intra-State supply, namely:---

• This provision introduces exceptions to the general rule, specifying certain types of goods supplies
that are not treated as Intra-State supplies, even if the supplier's location and the place of supply are
within the same State or Union Territory.
(i) supply of goods to or by a Special Economic Zone developer or a Special Economic Zone unit;

• Supplies of goods to or by Special Economic Zone (SEZ) developers or units are excluded from being
treated as Intra-State supplies.

• This exclusion is likely intended to facilitate and incentivize operations within SEZs, often treating
them as outside the regular domestic territory for tax purposes.

(ii) goods imported into the territory of India till they cross the customs frontiers of India; or

• Goods that are imported into India are not considered Intra-State supplies until they have crossed the
customs frontiers.

• This means that the supply of imported goods while they are still within customs control is treated
differently, likely as an inter-state supply or a supply that is outside the scope of GST.
(iii) Supplies made to a tourist (Section 15)

• Goods supplied to a foreign tourist in India, which are later taken outside India, are not treated
as intra-State.

• To promote tourism and avoid double taxation.

Example:

• A tourist from Germany buys handicrafts in Jaipur (Rajasthan) worth ₹50,000 and takes them
back to Germany.

• Though buyer and seller were in Rajasthan → Supply is treated as Inter-State (IGST).
2) 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:

• This clause mirrors the rule for goods, but applies to services. If the supplier's location and the place
of supply of services are both within the same State or Union Territory, it is generally considered an
Intra-State supply. Section 12 provides further guidance on the place of supply for services.

• 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.

• Similar to the exception for goods, the supply of services to or by SEZ developers or units is also
excluded from being treated as Intra-State supplies. This consistent treatment of SEZs reinforces their
special status under the GST regime.
Examples:

• A software company in Bengaluru (Karnataka) develops a website for a client in Bengaluru.

• Both location & place of supply in Karnataka → Intra-State (CGST + SGST).

• The same company provides IT services to an SEZ unit in Bengaluru.

• Still treated as Inter-State (IGST).

Explanation 1 – Distinct Establishments Rule

• The Act treats establishments of the same legal person in different places as distinct persons.

• Cases:

1. Office in India & abroad → treated separately.

2. Offices in different States/UTs → each is separate for GST.

3. Two GST registrations in same State (different business verticals) → treated as distinct.

Example:

• ABC Ltd has offices in Maharashtra and Gujarat.

• Supply from Maharashtra branch to Gujarat branch → treated as supply between distinct persons, so GST is
applicable (not like an internal transfer).
Explanation 2 – Branches/Agencies

• If a person operates through a branch, agency, or representative office in any territory →

considered to have an establishment there.

Example:

• A law firm in Delhi has a branch office in Mumbai.

• Services provided by Mumbai branch to a client in Mumbai → Mumbai office is treated as an

establishment in Maharashtra.
Section 9. Supplies in Territorial Waters

• The Integrated Goods and Services Tax (IGST) Act, 2017 governs the taxation of interstate
supplies, including those involving territorial waters.

• Section 9 specifically addresses the determination of the location of the supplier and the place
of supply when either or both fall within territorial waters.

• This section creates a legal fiction to assign such supplies to the nearest coastal State or Union
Territory for GST purposes.
Territorial Waters

• Territorial waters extend up to 12 nautical miles from the baseline (low-water line) of a coastal
state or union territory.

• India has full control over these waters for economic, security, and taxation purposes.

• GST Relevance: Since GST is state-specific for intra-state transactions and IGST applies to inter-
state, the law needs clarity on which state or union territory will collect tax for supplies
occurring in territorial waters.
Supplies in territorial waters.

Notwithstanding anything contained in this Act,––

a) where the location of the supplier is in the territorial waters, the location of such supplier; or

b) where the place of supply is in the territorial waters, the place of supply,

shall, for the purposes of this Act, be deemed to be in the coastal State or Union territory where the nearest
point of the appropriate baseline is located.

• Deemed Location Concept:

• Supplier in territorial waters → deemed to be located in nearest coastal State/UT.

• Place of supply in territorial waters → deemed to be in nearest coastal State/UT.

• Purpose: To avoid ambiguity and ensure proper distribution of GST revenue among states/UTs.
Example 1: Supplier in Territorial Waters

• A floating casino operates 6 nautical miles off the Goa coast.

• Supplier’s location: Floating casino (within territorial waters).

• Nearest baseline: Goa.

• Supplier is deemed to be in Goa → CGST + SGST apply (intra-state supply).

Example 2: Place of Supply in Territorial Waters

• A Tamil Nadu-based IT company provides software support to an oil rig 10 nautical miles off Mumbai coast.

• Supplier location: Tamil Nadu.

• Place of supply: Oil rig (territorial waters, nearest to Maharashtra).

• IGST applies (inter-state supply: TN to Maharashtra).

Example 3: Both Supplier and Recipient in Territorial Waters

• A catering service operates on an offshore oil platform in the Arabian Sea (near Gujarat).

• Both supplier & recipient in territorial waters.

• Nearest baseline: Gujarat.

• Both locations deemed Gujarat → CGST + SGST apply.

Example 4: Supply of Goods to Vessel

• Kerala supplier sends provisions to a ship off Lakshadweep coast.

• Supplier: Kerala.

• Place of supply: Ship (territorial waters near Lakshadweep).

• IGST applies → IGST revenue goes to Lakshadweep.

 CHAPTER V
PLACE OF SUPPLY OF GOODS
OR SERVICES OR BOTH
Section 10. Place of supply of goods other than supply of goods imported into, or exported from India.

• Rules for determining the place of supply of goods other than those imported into or exported from India.
These rules are important because they determine whether a supply is intra-State (CGST + SGST) or inter-
State (IGST).

(a) Where the supply involves movement of goods

• The place of supply is the location of goods where the movement terminates for delivery to the recipient.

• The destination where goods finally reach the buyer.

• Example:

• A supplier in Maharashtra sends goods to a buyer in Karnataka.

• Movement terminates in Karnataka → Place of supply = Karnataka → IGST applicable.

(b) Supply through a third person (Bill-to-Ship-to Model)

• “where the goods are delivered by the supplier to a recipient or any other person on the direction of a third
person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer
of documents of title to the goods or otherwise, it shall be deemed that the said third person has received the
goods and the place of supply of such goods shall be the principal place of business of such person.”

Explanation

• This clause handles situations where there is a three-party arrangement:

• A supplier

• A recipient (who would ultimately receive the goods)

• A third person (who instructs how/where the goods are delivered, maybe an agent or someone acting on

behalf of someone else)

• The goods are delivered by the supplier, but on the directions of the third person (that person might give

instructions about the delivery, routing, etc.), either before the goods start moving, or while they are in movement.

Sometimes documents of title are transferred (so ownership or title or rights might be transferred) before/during

movement.

• In such cases, Section 10(1)(b) treats the third person as though they have “received” the goods. That is a legal

fiction: even though the actual physical recipient may be someone else, the law deems (legally says) the third

person is the recipient for the purpose of determining place of supply.

• Place of supply in this case is taken to be the principal place of business of that third person. So the tax jurisdiction

is determined based on where that third person has their main business location.
Example 1: Bill-to / Ship-to Model (Classic Case)

• Mr. X (in Delhi) places an order with Supplier Y (in Maharashtra).

• Mr. X instructs Supplier Y to deliver the goods directly to Mr. Z (in Gujarat).

• Section 10(1)(b):

• The goods move from Maharashtra → Gujarat, but on the direction of Mr. X (Delhi).

• Law deems Mr. X (Delhi) to have “received” the goods.

• Place of supply = Mr. X’s principal place of business (Delhi).

• Supplier Y (Maharashtra) bills Mr. X (Delhi) → This is an inter-state supply (IGST).

(c) Where the supply does not involve movement of goods

• when goods do not move, the place of supply is simply where the goods are located at the moment they are delivered
to the recipient.

Conditions

• For clause (c) to apply:

1. No movement of goods occurs — neither the supplier nor the recipient moves the goods. So the goods are
already at the place where delivery will happen.

2. Delivery to the recipient happens at that location (i.e. goods are “made available” at that location).

3. The “location of goods at the time of delivery” is decisive. It may even be a physical site like a warehouse, or a
factory, or a shop, etc.
(ca) Supply to an unregistered person

• If goods are supplied to an unregistered person, the place of supply shall be:

• Address recorded on the invoice → That location is PoS.

• If no address is recorded, PoS = location of supplier.

• Mentioning State name in the invoice is enough to treat it as an address.

• Example:

• A seller in Maharashtra sells goods to an unregistered customer from Kerala, address

recorded = Kerala → PoS = Kerala → IGST charged.

(d) Where goods are assembled or installed at site

• Place of supply = place of installation or assembly.

• Example: A company in Gujarat installs machinery in Rajasthan → PoS = Rajasthan → IGST applicable.

(e) Supply on board a conveyance (vessel, aircraft, train, motor vehicle)

• PoS = location where goods are taken on board.

• Example:

• Tea served in a train journey from Delhi to Mumbai, boarded in Delhi → PoS = Delhi.

(2) If place of supply cannot be determined

• The manner will be prescribed by the Government (via rules).

Section 11. Place of supply of goods imported into, or exported from, India

• The rules for the place of supply of goods when they are imported into or exported from India. This section is
simpler than Section 10 , but very important for determining whether the supply qualifies as an import or an
export.

(a) Goods imported into India

• The place of supply is the location of the importer.

• Whenever goods come from a foreign country into India, GST is collected in the State where the importer is
located.

• Example:

• Importer located in Mumbai, Maharashtra imports goods from USA.

• Place of supply = Maharashtra (importer’s location).

• IGST is levied on imports (at the time of Customs clearance).

(b) Goods exported from India

• The place of supply is a location outside India.

• Goods moving from India to any place outside India are treated as zero-rated supplies under
GST.

• Example:

• An exporter from Delhi ships goods to London, UK.

• Place of supply = Outside India.

• GST benefit: Exports are zero-rated → No GST, but input tax credit/refund available.
Section 12. Place of supply of services where location of supplier and recipient is in India.

(1) This section applies only when both the supplier and the recipient are located in India.

(2) General Rule

• To a Registered Person:

• Place of supply = Location of recipient

• Example: A Chartered Accountant in Delhi provides services to a registered company in Maharashtra →

Place of supply = Maharashtra → IGST applies.

• To an Unregistered Person:

• (i) If address on record exists → That address

• (ii) If not → Location of supplier

• Example: An architect in Kolkata designs a plan for an unregistered person in Chennai, and the address is
on record → Place of supply = Chennai.
(3) Services related to Immovable Property

• When services are directly related to an immovable property (land or building), the place of supply is the location of the

property (or intended property), regardless of where the supplier or recipient is located.

• Includes architects, interior decorators, hotel accommodation, event halls, etc.

• Place of supply = Location of the property (or intended location)

• Real Estate Agent Service for Property in Kolkata

• Agent: Located in Hyderabad

• Client: Located in Mumbai

• Property: Kolkata (West Bengal)

• Place of supply = Kolkata (property location)

• Tax implication: CGST + SGST of West Bengal.

Construction of Office in Pune

• Contractor: Based in Delhi

• Recipient: Company registered in Chennai

• Construction site: Pune (Maharashtra)

• Place of supply = Pune

• Tax implication: CGST + SGST of Maharashtra.

(4) Personal Services (Restaurant, Beauty, Health)

• The supply of restaurant, catering, personal grooming, fitness, beauty, and health services is
considered to take place where the services are actually performed.

• Example: A spa in Mumbai serves a client from Bangalore → Place of supply = Mumbai → CGST
+ SGST.

(5) Training & Performance Appraisal

• If the customer is registered, the supply is considered to take place where the customer is
located. If the customer is not registered, it's where the services are actually performed.

• Example 1: Corporate training for a company in Bangalore → Place of supply = Bangalore.

Example 2: Soft skills training for an unregistered individual in Delhi → Place of supply = Delhi.
(6) Admission to Events or Parks

• The supply of services for admission to events or amusement parks is considered to take place where

the event or park is located.

• Place of supply = Location where event held

• Example: A music concert held in Hyderabad, ticket purchased by a person from Kerala → Place of

supply = Hyderabad → CGST + SGST.

(7) For Event Organization:

• The supply of services for organizing events or assigning sponsorship is considered to take place where

the customer is located if they are registered. If the customer is not registered, it's where the event is

held.
(8) For Goods Transportation:

• The supply of transportation services is considered to take place where the customer is located if they are

registered. If the customer is not registered, it's where the goods are handed over for transportation. If

the destination is outside India, the supply is considered to take place at the destination.

(9) For Passenger Transportation:

• The supply of passenger transportation services is considered to take place where the customer is located

if they are registered. If the customer is not registered, it's where the passenger starts their journey.

(10) For Services on Conveyances:

• The supply of services on planes, trains, ships, or vehicles is considered to take place at the first scheduled

departure point.
(11) For Telecommunication Services:

• The supply of telecom and related services is considered to take place at various locations
depending on how the service is provided, like where the connection is installed, where billing is
addressed, or where pre-payment is received.

(12) For Financial Services:

• The supply of banking and financial services is considered to take place where the customer is
located according to the service provider's records.
(13) For Insurance Services:

• The supply of insurance services is considered to take place where the customer is located if they are

registered. If the customer is not registered, it's where the customer's address is recorded by the

insurance provider.

(14) For Advertisement Services:

• The supply of advertisement services to governments or authorities is considered to take place in each

state or union territory mentioned in the contract, proportionate to the amount attributable to the

dissemination in each area.

 Type of Service Place of Supply
Services to a registered person Location of the registered person
If address available: Location of recipient
Services to an unregistered person
If address not available: Location of supplier

Services related to immovable property Location of the property

Restaurant, grooming, etc. services Location where services are performed

Registered person: Location of person

Training and appraisal services
Unregistered person: Location of services

Admission to events, amusement parks Location of event or park

Telecommunication services Various criteria depending on service type

 Section applied supplier or recipient’s location is outside India

Section 13 Place of supply of services where location of supplier or location of recipient is outside
India

Section deals with determining the place of supply of services when either the supplier or the recipient
is located outside India.

General Rule for Place of Supply:

• Place of supply for services (except specific cases) is the location of the recipient.

• If recipient's location is not available, then it is the location of the supplier.

 Section applied supplier or recipient’s location is outside India

Section 13 (3) Specific Scenarios:

Services Performed at Specific Locations:

• If services require goods to be physically provided by the recipient to the service provider or their
representative, the place of supply is where the services are performed.

• If services are provided remotely through electronic means, the place of supply is where the goods are
located at the time of service delivery.

• Exception: This rule does not apply if services are related to goods temporarily imported into India for repairs
or treatment and then exported without being used in India, except for the necessary repairs or treatment.

Services Requiring Physical Presence:

• Services provided to an individual, where the recipient or their representative must be physically present
with the service provider for service delivery, are taxed based on where the services are performed.
Section 13 (4) Immovable Property Related Services:

• This section specifies that the place of supply for services directly related to immovable property is determined based
on where the immovable property is located or intended to be located. Here is a simplified explanation of this
provision:

Services Covered:
• Services provided directly in relation to immovable property, such as:
• Services by experts and estate agents.
• Accommodation services by hotels, inns, guest houses, etc.
• Grant of rights to use immovable property.
• Services related to construction work, including architects and interior decorators.

Place of Supply:
• The place of supply for these services is where the immovable property is situated or where it is intended to be
located.
 Section applied supplier or recipient’s location is outside India

Section 13 (5) Event Services:

• This section specifies that the place of supply for services related to admission to or organization of various

events, including cultural, artistic, sporting, scientific, educational, entertainment events, celebrations,

conferences, fairs, exhibitions, or similar events, is determined based on where the event is actually held.

Services Covered:

• Services related to admission to events or organization of events falling under various categories like cultural,

artistic, sporting, scientific, educational, entertainment, celebrations, conferences, fairs, exhibitions, etc.

• Ancillary services related to admission or organization of such events are also included.

Place of Supply: The place of supply for these services is where the event is physically held.
 Section applied supplier or recipient’s location is outside India

Section 13 (6) Multiple Locations:

• If services covered under subsections (3), (4), or (5) are offered at various places, including at least one location

within the taxable territory, the place of supply for those services will be deemed to be in the taxable territory.

• Services Related to Goods: A company based outside India provides consulting services for a manufacturing

plant located in India. If the company's consultants visit the plant in India and also provide some services

remotely, the place of supply for these services would be considered within the taxable territory (India) since

the services are provided at multiple locations, including in India.

• Property-Related Services: An architecture firm based in a foreign country is hired to design a commercial

building in India. If the firm's architects work on the project both remotely and on-site in India, the place of

supply for their architectural services would be within the taxable territory (India) due to the services being

provided at multiple locations, including in India.

 Section applied supplier or recipient’s location is outside India

• Event-Related Services: A foreign event management company organizes a conference in India that

includes admission services and event coordination. Since the event is held in India and the services

are provided at the event location, the place of supply for these event-related services would be

within the taxable territory (India).

• In each of these examples, the provision ensures that if services are provided at multiple locations,

including within the taxable territory, the place of supply is considered to be within the taxable

territory for tax purposes.

 Section applied supplier or recipient’s location is outside India

Section 13 (7) Services in Multiple Locations:

• If services covered under subsections (3), (4), or (5) are supplied in more than one state or union territory, the place of

supply for those services will be considered to be in each of the respective states or union territories.

Value Allocation:

• The value of services specific to each state or union territory will be determined based on the proportion of the total

value of services provided in each location. This allocation can be based on the terms of the contract or agreement, or

as prescribed in the absence of such documentation.

Example

Real Estate Services: A real estate agency assists clients in buying properties located in various states in India. The

agency's agreement with clients specifies how the services and fees are allocated based on the location of the

properties. The value of real estate services specific to each state is determined according to the terms of the

agreement.
 Section applied supplier or recipient’s location is outside India

Section 13 (8) Financial Institution

the place of supply for specific services, which will be considered the location of the supplier of services.

Services Provided by Financial Entities:

• Services provided by a banking company, financial institution, or non-banking financial company to

account holders will have the place of supply at the location of the service provider.
 Section applied supplier or recipient’s location is outside India

Section 13 (9) Transportation of Goods:

• For services involving the transportation of goods (excluding mail or courier services), the place of supply

will be determined as the place where the goods are being transported to, i.e., the place of destination.

Examples

• Goods Transported Within India: A logistics company based in Mumbai, India, is hired to transport goods

from Mumbai to Delhi. In this case, since the goods are being transported to Delhi, the place of supply

for the transportation services provided by the logistics company will be considered as Delhi, the place of

destination.

• International Shipping: An international shipping company based in Singapore is contracted to transport

goods from Singapore to Chennai, India. In this scenario, the place of supply for the transportation

services will be Chennai, the location where the goods are destined to arrive.
 Section applied supplier or recipient’s location is outside India

Section 13 (10) Passenger Transportation:

• For services related to the transportation of passengers, the place of supply will be
determined as the location where the passenger begins their journey by boarding the
conveyance for a continuous trip.

Examples

• Flight Travel: A passenger checks in at the Chennai International Airport in India for a
flight to Singapore. The place of supply for the passenger transportation service will
be Chennai, as it is where the passenger boards the aircraft for the continuous
journey to Singapore.
 Section applied supplier or recipient’s location is outside India

Section 13 (11) On-Board Services:

• For services offered on board a conveyance during a passenger transport operation, where
the services are intended to be consumed while on board, the place of supply will be
determined as the first scheduled point of departure of the conveyance for the journey.

Example

• In-Flight Services: An airline flight operates from Mumbai to London, with in-flight services
such as meals, beverages, and entertainment provided to passengers during the journey.
According to the provision, the place of supply for these in-flight services, which are intended
to be consumed while on board, will be considered as Mumbai, the first scheduled point of
departure for the flight to London.
 Section applied supplier or recipient’s location is outside India

Section 13 (12) Online Information Services:

• For services related to online information and database access or retrieval, the
place of supply will be determined as the location of the recipient of the services.

Criteria for Location Determination:

• These conditions include factors such as the recipient's address presented online,
the payment method used, the billing address, internet protocol address, bank
location, subscriber identity module card country code, and fixed landline
location.
Section 14 Special provision for payment of tax by a supplier of online information and database
access or retrieval services

Applicability
• Supplier is in a Non-Taxable Territory (outside India)

• Recipient is a Non-Taxable Online Recipient (unregistered person in India)

• In such cases, the supplier located outside India is liable to pay IGST.

Supplier Liability:

• When online information services are provided by a person in a non-taxable territory to a non-
taxable online recipient, the supplier in the non-taxable territory is liable to pay integrated tax on
the services.
Example

• Netflix (USA-based) provides streaming services to an individual in India (not registered under
GST).
• Netflix = Supplier in Non-taxable territory

• Indian user = Non-taxable online recipient

• Netflix must pay IGST under this section.

Role of Intermediary

• If an intermediary (e.g., app store) facilitates the supply, then:

• Intermediary is deemed to be the supplier unless all these conditions are satisfied:
• (a) Invoice clearly shows the actual supplier

• (b) Intermediary does not collect or process payment

• (c) Intermediary does not authorize delivery

• (d) General terms set by the supplier, not the intermediary

• If any condition fails, the intermediary becomes liable.

Example
• A foreign e-book supplier sells via an app store to an Indian user:

• If app store collects payment and sets terms → app store liable for IGST.

• If app store only provides platform without involvement in payment → Supplier remains liable.
Registration under Simplified Scheme

• Supplier must take single registration in India under Simplified Registration Scheme.

• If supplier has a representative in India → Representative must register and pay IGST.

• If no representative → Supplier must appoint a person in India for tax compliance.

Example
• Spotify (foreign company) provides music streaming to Indian users:

• Scenario 1: Spotify has an Indian office → That office registers and pays IGST.

• Scenario 2: No office, but an Indian representative handles marketing → Representative registers and

pays IGST.

• Scenario 3: No office and no representative → Spotify appoints an Indian agent to pay IGST.
 CHAPTER VII
ZERO RATED SUPPLY
Section 16 – Zero Rated Supply under IGST Act

• Zero-rated supply refers to supplies that attract 0% tax under GST but allow
input tax credit (ITC) claim. Unlike exempt supplies (where ITC is not allowed),
zero-rated supplies allow ITC refund to avoid cascading of taxes.
Sub-section (1): Meaning of Zero-Rated Supply

• Zero-rated supply means:

a) Export of goods or services or both; or

b) Supply of goods or services or both to a Special Economic Zone (SEZ) developer or SEZ unit for

authorized operations.

Examples:

c) Export: An Indian textile company exports clothes to the UK.

d) SEZ: A company in Pune supplies machinery to an SEZ unit in Gujarat for manufacturing export goods.
Sub-section (2): Input Tax Credit (ITC) Allowed: Even though zero-rated supplies are taxed at 0%, the
supplier can still take credit of input tax on purchases used for making these supplies.

Example: A manufacturer exports goods worth ₹50 lakh. He paid ₹5 lakh GST on raw materials. He can
claim a refund of ₹5 lakh because exports are zero-rated.

Sub-section (3): Refund of Unutilised Input Tax Credit

• A registered person making zero-rated supply (exports or supplies to SEZ) can claim a refund of unutilised
ITC without paying IGST.

• To do this, they must:

• Furnish a Bond or Letter of Undertaking (LUT) to the tax authorities.

• This helps exporters because:

• They don’t have to pay IGST upfront and then wait for a refund, which would block their working capital.

• The process for refund is laid down under Section 54 of CGST Act and related rules.
Sub-section (4): Government’s Authority to Specify Conditions

• The Government (based on GST Council recommendations) can issue notifications to:
• Specify a class of persons who may pay IGST on zero-rated supplies and later claim a refund (instead of using

LUT/Bond).

• Specify a class of goods or services for which IGST must be paid first and then refunded.

Example for (i) Class of Persons:

• The Government may decide that Export Oriented Units (EOUs) must pay IGST on exports and then

claim a refund, instead of using LUT.

Example for (ii) Class of Goods/Services:

• For certain sensitive goods like precious metals or petroleum products, the government can require

exporters to pay IGST on export and claim a refund, to maintain better control.
Sub-section (5): Restriction on Refund

• If the exported goods are subject to export duty, then:

• No refund of unutilised ITC or IGST paid on exports is allowed.

• This avoids double benefit because exporters already get benefits through duty drawback or

export duty exemptions.

Example:

• XYZ Ltd. exports iron ore, which attracts export duty.

• Even though exports are zero-rated under GST, XYZ cannot claim a refund of ITC or IGST because

iron ore is subject to export duty.

Section 17(1) – Apportionment of IGST to Central Government

• When IGST (Integrated GST) is collected on inter-State supplies or imports, it is first deposited with

the Central Government.

• Later, this tax amount is apportioned (shared) between the Central Government and State

Governments as per rules.

Sub-section (1):

• It says that for certain transactions, a part of the IGST will go to the Central Government equal to

the amount of Central GST (CGST) that would have been collected if the supply was an intra-State

supply.

• Now let’s explain each clause (a) to (f) with examples:

(a) Inter-State supply to an unregistered person or to a registered person paying tax under Section 10

(Composition Scheme)

• Example: A supplier in Maharashtra sells goods worth ₹1,00,000 to an unregistered person in

Karnataka.

• IGST @18% = ₹18,000 collected.

• Since the buyer is unregistered, they cannot claim ITC.

• Out of this ₹18,000, an amount equal to 9% (CGST equivalent) i.e., ₹9,000 will go to the Central

Government.
(b) Inter-State supply where the registered person is NOT eligible for ITC

Example:

• A hospital in Delhi buys medical equipment from a supplier in Haryana for ₹5,00,000 (IGST @12% =

₹60,000).

• Hospitals providing healthcare services are exempt from GST, so they cannot claim ITC.

• Therefore, ₹30,000 (equivalent to CGST rate) will go to the Central Government.

(c) Inter-State supply to a registered person who does NOT avail ITC within the specified period

Example:

• A trader in Tamil Nadu buys goods from Gujarat in FY 2023-24 and pays IGST ₹50,000.

• He does not claim ITC in his GST returns before the due date for filing the Annual Return (Dec 31, 2024).

• The IGST stays in the account, and ₹25,000 (CGST equivalent) is apportioned to the Central Government.
(e) Import of goods or services where the registered person is NOT eligible for ITC

Example: A charitable trust in Rajasthan imports medical supplies for free distribution worth ₹2,00,000.

• IGST @12% = ₹24,000.

• Since the trust is exempt, it cannot claim ITC.

• ₹12,000 (CGST equivalent) will go to the Central Government.

• (f) Import of goods or services by a registered person who does NOT avail ITC within the specified period

Example:

• A registered trader in Gujarat imports machinery in FY 2023-24 and pays IGST ₹80,000.

• He fails to claim ITC by the due date of filing the annual return.

• ₹40,000 (CGST equivalent) is apportioned to the Central Government.

Section 17(2) – Apportionment of Remaining IGST

• The remaining IGST after the Central share goes to:

• The State where the supply takes place, or

• The Central Government (for Union Territories).

Special Cases:

• If the place of supply is not determinable, distribute proportionately among States and UTs
based on previous year’s supply data.

• If the supplier is unidentifiable, distribute based on previous year’s tax collection pattern.

• Example: If IGST of ₹18,000 is collected and ₹9,000 is already apportioned to Centre under sub-
section (1), then the remaining ₹9,000 goes to the destination State.
Section 17(2A) – Ad hoc Apportionment

• If exact distribution is not possible immediately, the IGST is split 50% to Centre and 50% to
States/UTs temporarily, based on GST Council recommendation.

• Example: ₹1,000 crore IGST unallocated → ₹500 crore goes to Centre and ₹500 crore to all States
proportionately.
Section 17(3) – Apportionment of Interest, Penalty, and Compounding

• Same rule applies for interest, penalty, and compounding amounts collected on
IGST.

• Example: If ₹10 lakh penalty is collected for IGST evasion, it is apportioned just
like IGST tax.
Section 17(4) – Transfer of Funds

• After apportionment:

• IGST account is reduced by the apportioned amount.

• The Centre transfers:

• To Central Tax Account for its share.

• To State Tax Account for the States’ share.

• Example: If ₹18,000 IGST collected → ₹9,000 transferred to CGST account and ₹9,000 to
Karnataka SGST account.
Section 17(5) – Adjustment for Refund

• If IGST apportioned earlier is later refunded to the taxpayer, the refunded

amount is deducted from the future apportionment to that State or Centre.

• Example: If ₹50 crore IGST was earlier allocated to State X, but ₹5 crore is
refunded, the next settlement reduces State X’s share by ₹5 crore.
Powers and Functions of the GST Council

• The GST Council is a constitutional body under Article 279A of the Indian
Constitution. It plays a key role in implementing and regulating the Goods and
Services Tax (GST) system in India by ensuring uniformity and cooperation between
the Centre and the States.
Main Functions and Powers of the GST Council

• The GST Council makes recommendations to the Union and the States on various aspects of GST.
These include:

Taxes to be subsumed under GST

• The Council decides which existing taxes and cesses should be merged into GST.

• Example: Earlier, there were multiple indirect taxes like Excise Duty, Service Tax, and VAT. The GST
Council recommended merging them into GST to avoid double taxation.
Model GST Laws & Principles of Levy

• The Council prepares model GST laws and decides rules for:

• Levy of tax (who pays and when)

• Apportionment of GST collected on inter-State trade (between Centre and States)

• Place of supply rules to determine tax jurisdiction.

Example:

• If goods move from Maharashtra to Karnataka, IGST applies and revenue is shared between Centre and States.

2. List of goods and services under GST and exemptions

• It decides which goods/services will be taxed and which will be exempted.

Example:

• Essential items like fresh milk and fruits are exempt from GST.

• Luxury cars attract 28% GST + cess.

GST Rates (Standard, Floor, and Special Rates)

• The Council recommends GST slab rates like 5%, 12%, 18%, and 28%.

• It can also fix floor rates with flexibility for states within bands.

Example:

• 18% GST on electronic appliances,

• 5% GST on essential medicines.

Special Rates during Natural Disasters

• The Council can impose additional rates to raise revenue during disasters.

Example:

• After Kerala floods (2018), a 1% disaster cess was suggested for Kerala for two years.
Special Provisions for Certain States

• Special rules for North-Eastern and Himalayan States due to their unique conditions.

Example:

• Sikkim, Mizoram, Manipur, Nagaland have lower compliance requirements.

Special Rates during Natural Disasters

• The Council can impose additional rates to raise revenue during disasters.

Example:

• After Kerala floods (2018), a 1% disaster cess was suggested for Kerala for two years.
Thank You…..