Introduction to IGST and Meaning of Place of Supply

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....e shall be two components of GST: (i) Central tax (CGST), Levied & collected under the authority of CGST Act, 2017 passed by the Parliament. (ii) State tax (SGST), Levied & collected under the authority of SGST Act, 2017 passed by respective State. Why the third tax in the name of IGST? Before discussing the IGST Model and its features, it is important to understand how inter-State trade or commerce is being regulated in the present indirect tax system. It is significant to note that presently the Central Sales Tax Act, 1956 regulates the inter-State trade or commerce (hereinafter referred to as "CST"), the authority for which is constitutionally derived from Article 269 of the Constitution. Further, as per Article 286 of the Constitut....

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....ned for many states in a single transaction or an advertisement or a programme is broadcasted across the country at the same time. etc. 2. The Central Sales Tax Act, 1956 suffers from the following shortcomings. * CST is collected and retained by the origin State, which is an aberration. Any indirect tax, by definition, is a consumption tax, the incidence of which, is borne by the consumer. Logically, the tax must accrue to the destination State having jurisdiction over the consumer. * Input Tax Credit (hereinafter referred to as ITC) of CST is not allowed to the buyer which, results in cascading of tax (tax on tax) in the supply chain. * Various accounting forms are required to be filed in CST viz., C Form, E1, E2, F, I, J Forms etc....

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....vices, keeping in mind the destination/consumption principle. In other words, the place of supply is based on the place of consumption of goods or services. As goods are tangible, the determination of their place of supply, based on the consumption principle, is not difficult. Generally, the place of delivery of goods becomes the place of supply. However, the services being intangible in nature, it is not easy to determine the exact place where services are acquired, enjoyed and consumed. In respect of certain categories of services, the place of supply is determined with reference to a proxy. * A distinction has been made between B2B (Business to Business) & B2C (Business to Consumer) transactions, as B2B transactions are wash transactio....