IGST Act, 2017: Definitions, inter state trade or intra state ,IGST , Offences and penalties, GST portal: GSTN, GSP's and ASP's

 IGST Act, 2017:Definitions, inter state trade or  intra state ,IGST, Exemption from GST, Returns andPayment under GST, Refund of taxes, Offences

IGST Act, 2017: Comprehensive Overview

The IGST (Integrated Goods and Services Tax) Act, 2017 is an integral part of India's GST framework, which transformed the country's indirect tax system. This act governs the levy and collection of the IGST on supplies of goods and services in the course of inter-state trade or commerce. In this comprehensive guide, we will delve into the various aspects of the IGST Act, exploring its definitions, inter-state and intra-state supplies, valuation rules, returns and payment procedures, exemption criteria, refund provisions, penalties for non-compliance, and the role of the GST portal, including GSTN, GSPs, and ASPs.

Definitions

The IGST Act, like any other tax legislation, begins by providing specific definitions for various terms used throughout the act. These definitions serve as the foundation for interpreting the provisions and understanding the legal framework under which IGST operates.

Some of the key definitions include:

CGST, SGST, and IGST:

 These acronyms represent Central Goods and Services Tax, State Goods and Services Tax, and Integrated Goods and Services Tax, respectively. They specify the categories of tax applicable to various transactions.

Inter-State Supply:

 This definition is crucial for understanding the scope of IGST. Inter-state supply refers to the supply of goods or services from one state to another. It determines whether IGST is applicable to a transaction.

Taxable Person:

 A taxable person is anyone who is registered or liable to be registered under the act. Understanding who qualifies as a taxable person is vital for compliance.

Input Tax: 

Input tax refers to the GST paid on the purchase of goods and services. It is a key concept for claiming Input Tax Credit (ITC).

Output Tax:

 Output tax is the GST charged by a registered person on the supply of goods or services. It is essential for determining tax liability.

These definitions set the stage for interpreting and implementing the provisions of the IGST Act.

Supplies in the Course of Inter-State Trade or Commerce

Inter-State Supply

Definition and Scope: The IGST Act primarily deals with the taxation of supplies made between states in India. Inter-state supply is a fundamental concept under this act. It covers any transaction that involves the movement of goods or services from one state to another.

Tax Liability:

 The act specifies the circumstances under which IGST is to be levied on inter-state supplies. The rates at which IGST is charged are also outlined. This aspect is crucial for businesses engaged in inter-state trade.

Place of Supply

Determination of Place of Supply:

 Accurately determining the place of supply is essential for levying the correct amount of IGST. The act provides specific rules and criteria for establishing the place of supply for different types of goods and services.

Impact on Tax Liability:

 The place of supply directly affects the tax liability. Whether a transaction is categorized as an inter-state or intra-state supply depends on this determination.

Supplies in the Course of Intra-State Trade or Commerce

Intra-State Supply

Definition and Scope: In contrast to inter-state supply, intra-state supply refers to the supply of goods or services within the same state. The IGST Act does not have jurisdiction over such supplies. They are governed by the CGST (Central Goods and Services Tax) and SGST (State Goods and Services Tax) Acts.

Valuation Rules

Valuation rules are crucial for determining the taxable value of supplies, which in turn affects the calculation of IGST liability.

Computation of Taxable Value

Valuation Rules: The IGST Act provides specific rules for the valuation of supplies. These rules ensure consistency and fairness in the determination of the value of goods or services for tax purposes. They help prevent any undervaluation or overvaluation of supplies.

Inclusion and Exclusion:

 The rules specify what elements should be included in the taxable value and what should be excluded. For example, discounts, subsidies, and taxes are considered while calculating the taxable value.

Special Cases:

 Valuation rules also address specific scenarios where the value needs to be determined differently. This may include scenarios where the supplier and recipient are related parties, and the transaction price is not reflective of the open market.

Returns and Payment under GST

Returns

Filing Periodic Returns: The IGST Act mandates that registered taxpayers must file periodic returns, summarizing their IGST activities. The act prescribes different types of returns and their respective due dates.

Information to be Furnished:

 Returns require taxpayers to furnish specific information, including details of their supplies, Input Tax Credit (ITC), and tax payments. Timely and accurate filing of returns is crucial for compliance.

Payment of IGST

Determination of Tax Liability: Once the taxable value is computed, taxpayers are required to determine their tax liability. This includes calculating the IGST amount payable based on the rate of tax applicable to their supplies.

Due Dates and Procedures: 

The IGST Act outlines due dates for payment, methods for electronic payment, and the steps for claiming ITC. Timely payment is essential to avoid penalties and interest.

Refund of Taxes

Refund Provisions: 

The IGST Act includes provisions for the refund of IGST. Refunds may be claimed in specific cases, such as exports, inverted duty structure, or when excess taxes have been paid. The act sets out the procedures and conditions for claiming refunds.

Export Refunds:

 The act facilitates the refund of IGST paid on exports. Exporters are eligible for refunds to promote international trade.

Offences and Penalties

Offences

List of Offences: The IGST Act lists various offences related to non-compliance with its provisions. These offences include tax evasion, fraudulent claims, failure to maintain records, and various forms of non-compliance.

Penalties: 

To deter non-compliance, the act prescribes penalties for each offence. Penalties may include fines, imprisonment, or both, depending on the nature and severity of the offence.

GST Portal: GSTN, GSPs, and ASPs

GST Portal

Goods and Services Tax Network (GSTN): The GSTN is the technology backbone of the GST system in India. It serves as the online portal through which taxpayers can register, file returns, and manage their GST-related activities.

Role in Compliance:

 The GSTN plays a central role in enabling taxpayers to meet their compliance requirements efficiently. It provides a user-friendly platform for businesses to interact with the GST system.

GST Suvidha Providers (GSPs)

Role of GSPs: GST Suvidha Providers, or GSPs, are third-party service providers authorized to offer a range of GST-related services and solutions to businesses. Their role is to assist taxpayers in complying with GST regulations.

Services Provided: 

GSPs offer a variety of services, including helping businesses file returns, manage invoices, reconcile data, and ensure compliance with GST laws.

Application Service Providers (ASPs)

ASPs and their Functions: Application Service Providers, or ASPs, develop software applications that allow businesses to connect with the GST portal. They enable data integration, facilitate report generation, and simplify GST compliance.

Data Integration: 

ASPs play a crucial role in integrating a business's financial and operational data with the GST portal, ensuring accurate and timely compliance.

In conclusion,

 the IGST Act, 2017, is a cornerstone of India's Goods and Services Tax framework. It governs the taxation of inter-state supplies and provides a clear legal framework for the levy and collection of IGST. Understanding the act's definitions, inter-state and intra-state supply provisions, valuation rules, return filing procedures, refund provisions, and penalties for non-compliance is essential for businesses and taxpayers. Additionally, the role of the GST portal, including GSTN, GSPs, and ASPs, is vital for simplifying compliance and ensuring a seamless interaction with the GST system. It is imperative that businesses and taxpayers stay updated on the provisions of the IGST Act to navigate the complexities of India's GST regime effectively.

TEST YOUR KNOWLEDGES

FAQs

1. What are the key definitions in the IGST Act, 2017?

The IGST Act, 2017, provides important definitions for terms used in the Act to ensure clarity and consistency in the application of GST.

2. What does "Supplies in the course of inter-state trade or commerce" mean?

This refers to transactions involving the movement of goods or services from one Indian state to another, and IGST is applicable to such supplies.

3. What are "Supplies in the course of intra-state trade or commerce"?

These are transactions involving the supply of goods or services within the same state, and they are subject to State GST (SGST) and Central GST (CGST).

4. How is IGST levied and collected?

The IGST Act outlines the rules and procedures for imposing and collecting Integrated GST on inter-state supplies.

5. How is the "Place of Supply" determined under GST?

The "Place of Supply" rules help identify the location where GST is payable, and this is crucial for applying the correct tax rate.

6. What types of goods and services are exempt from GST?

The Act defines categories of goods and services that are exempt from GST, meaning they are not subject to taxation.

7. How is the value of supply computed, and what is the tax liability?

The Act provides guidelines for calculating the value of supplies and determining the corresponding tax liability.

8. What are the valuation rules under the IGST Act, 2017?

Valuation rules are established to determine the value of goods and services for GST purposes, ensuring consistency and fairness.

9. How do returns and payments work under GST?

The Act specifies the procedures for filing returns and making GST payments, helping businesses comply with their tax obligations.

10. How can one apply for a refund of taxes paid under GST?

The Act outlines the process for seeking a refund of excess taxes paid, ensuring businesses can claim their rightful refunds.

11. What are the penalties and offenses under the IGST Act?

The Act specifies the consequences for non-compliance, including penalties and offenses, to ensure adherence to GST regulations.

12. What is the role of the GST portal, GSTN, GSPs, and ASPs?

The GST portal, GSTN (Goods and Services Tax Network), along with GSPs (GST Suvidha Providers) and ASPs (Application Service Providers), facilitate GST compliance and provide a platform for businesses to interact with the GST system.