GST Billing: Intra-state Vs. Inter-state transactions

When talking about the GST Bill format, the terms interstate and intrastate have a great significance in deciding the involvement of IGST, SGST or CGST. While interstate supply associates with IGST, intra-state supply links with SGST and CGST. In this article, you’ll learn the difference between interstate and intrastate transactions and the conditions required for their initiation.

What Is An Inter-State Transaction?

Under the GST act, an inter-state transaction of goods or services is named as a supply from between two states i.e from one state to another. The GST Act specifies an interstate or a domestic supply when the position of the supplier and the place of delivery are :

• Two different states
• Two locations falling under the same union territory or the locations involving one state and one union territory.

Furthermore, the supply of goods that are imported in the country is often called interstate supply before reaching the customs offices. Also, the supply of goods and/or services is regarded as an inter-state supply to/from a specific economic or development zone.

For instance, if your business operates in the state of Maharashtra and you supply your goods or services to a company in Karnataka, then this transaction is listed under the interstate supply. It is also used when the supplier and the receiver are in two different countries.

What is Intra State Transaction?

Under the GST act, an intrastate transaction takes place when the exchange of goods or services occurs within the same union territory or state. In other words, the supply of goods or services in terms of an intrastate transaction takes place when the position of the sender, as well as the receiver, are the same.

In case of an intra-state transaction, the supplier must receive both SGST and CGST from the customer. While SGST is deposited with the state government, CGST is filed with the central government.

For instance, when a supplier of Mumbai (in the state of Maharashtra) sends goods to a buyer of Pune (another place in Maharashtra), the involvement of both locations within Maharashtra is considered as an intrastate transaction. This simply means that, if the seller’s location and the location of delivery falls within the same state or union territory, supply is intrastate and the transaction will require SGST and CGST.

GST Bill Format: Interstate vs. Intrastate Transactions

• Interstate supply within GST accounts for integrated Goods and Services Tax or IGST.
• Both the State Goods and Services Tax (SGST) and CBT apply for the intra-state supply.
• In the case of an intrastate transaction, the GST rate stays the same for the involved services or goods. However, the tax rate and GST must be categorized into two groups: CGST and SGST.
• According to the existing GST law, taxes must be imposed on all the goods and services according to their supply position.
• If the transaction involves an intra-state supply of goods (or services or both), then the Center of Commerce is responsible for collecting the CGST, and the SGST needs to be collected by the State authority where the transaction takes place.
• When talking about inter-state transactions of goods or services, the Central authorities collect the IGST. There is no need for the CGST and SGST in this case. Further, the IGST rate is the same as the combined value of SGST and CGST.

Why Is It Necessary To Differentiate The Supply In The GST Bill Format?

A GST bill format requires classifying the transaction in one of the four types of taxes including SGST, CGST, IGST and UTGST (Union Territory GST). When an intrastate transaction takes place, UTGST/SGST and CGST are filed and need to be paid. Whereas an IGST is required in international or interstate transactions.

Therefore, it is clear that different taxes need to be filed and paid depending on the type of transaction.