The Integrated Goods and Services Tax Act, 2017
A chapter-wise and section-wise study of the IGST Act in clear, simple English — built strictly from the Bare Act.
Overview of the Act
The IGST Act, 2017 is the central law that levies tax on the inter-State supply of goods and services, on imports, and on supplies to and from Special Economic Zones. It decides whether a supply is inter-State or intra-State, fixes the place of supply, keeps exports zero-rated, and shares the collected tax between the Centre and the consuming State. It deliberately borrows most of its machinery from the CGST Act, so the two are read together.
Flowchart & Mind Map
Two ways to see the whole Act at once — a top-to-bottom flow of how the chapters connect, and a balanced mind map of its main themes.
Structure flowchart
Mind map of core themes
Study Roadmap
A suggested order for reading the Act so each idea builds on the one before it.
Chapter-wise & Section-wise Study
Pick a chapter tab to open it. Inside each chapter the sections appear in order — click a section to expand its meaning, example and reader note.
Preliminary
Sets up the Act — its name and reach, and the definitions that the rest of the law depends on.
What it means
Gives the Act its official name — the Integrated Goods and Services Tax Act, 2017 — and states its territorial reach. It comes into force on a date the Central Government notifies, and different provisions may be brought into force on different dates.
Legal effect / purpose
Fixes the legal identity and geographical reach of the Act and lets the Government switch on its provisions in stages by notification.
One set of provisions may be notified to take effect from a particular date while other provisions are appointed to start on a different date.
As originally enacted, the Act extended to the whole of India except the State of Jammu and Kashmir.
What it means
Defines the key terms used throughout the Act — such as central tax, continuous journey, export and import of goods and services, fixed establishment, integrated tax, intermediary, location of the supplier and recipient of services, online information and database access or retrieval (OIDAR) services, output tax, Special Economic Zone, supply, taxable territory and zero-rated supply. Words used but not defined here, yet defined in the CGST, UTGST or Compensation Acts, carry the same meaning as in those Acts.
Legal effect / purpose
Gives precise legal meaning to terms so the operative provisions are read consistently; many definitions are borrowed from the CGST Act.
“Export of services” is met only when all five listed conditions hold — for instance, the supplier is in India, the recipient is outside India, the place of supply is outside India, payment is in convertible foreign exchange, and the two are not merely establishments of a distinct person.
“Intermediary” covers a broker or agent who arranges a supply between others, but not a person who supplies the goods or services on his own account.
Administration
Names the officers who run the IGST law and lets State or Union territory officers act under it.
What it means
The Board may appoint such central tax officers as it thinks fit to exercise the powers under this Act.
Legal effect / purpose
Creates the administrative machinery — the officers who will operate the IGST law.
The Board can designate central tax officers to carry out functions assigned under the IGST Act.
What it means
Officers appointed under the State GST Act or the Union Territory GST Act are authorised to be proper officers for the purposes of this Act, subject to the exceptions and conditions the Government specifies on the Council’s recommendation.
Legal effect / purpose
Lets the same State or UT officials administer the IGST law too, avoiding a duplicate set of officers.
A State GST officer may be authorised to act as the proper officer for specified IGST functions, within the limits notified.
Levy and Collection of Tax
The charging part — it imposes IGST on inter-State supplies and allows the Government to grant exemptions.
What it means
Levies the integrated tax on all inter-State supplies of goods or services (except alcoholic liquor for human consumption), on the value determined under Section 15 of the CGST Act and at rates not exceeding forty per cent as notified. IGST on imported goods is levied under the Customs Tariff Act, 1975. Tax on petroleum crude, high speed diesel, petrol, natural gas and aviation turbine fuel starts from a notified date. The section also covers reverse charge on notified supplies, reverse charge where an unregistered supplier supplies to a registered person, and liability of an electronic commerce operator for notified services.
Legal effect / purpose
This is the charging section — the legal foundation that actually imposes IGST and fixes who is liable to pay it.
When a seller in one State supplies goods to a buyer in another State, IGST is charged on that inter-State supply.
The maximum rate written in the Act is forty per cent; the actual rates are notified by the Government on the Council’s recommendation.
What it means
Allows the Government, in the public interest and on the Council’s recommendation, to exempt goods or services from IGST — generally by notification, or in exceptional cases by special order. It may also insert an Explanation to clarify such a notification or order within one year.
Legal effect / purpose
Gives flexibility to relieve specified supplies from tax, fully or in part.
The Government may notify an exemption that relieves a specified category of goods or services from IGST.
Where an exemption is granted absolutely, the supplier cannot collect tax in excess of the effective rate on that supply.
Determination of Nature of Supply
The rules that decide whether a supply is inter-State (attracting IGST) or intra-State (attracting CGST plus SGST or UTGST).
What it means
Treats a supply as inter-State broadly where the location of the supplier and the place of supply are in two different States, two different Union territories, or a State and a Union territory. Imported goods (till they cross the customs frontiers of India), imported services, supplies to or by an SEZ developer or unit, supplies where the place of supply is outside India, and any supply in the taxable territory that is not intra-State and not covered elsewhere, are also treated as inter-State.
Legal effect / purpose
Identifies the transactions that attract IGST rather than CGST plus SGST or UTGST.
A supplier in Maharashtra sells goods to a buyer in Gujarat — the supplier’s location and the place of supply are in two different States, so it is an inter-State supply.
What it means
Treats a supply as intra-State where the supplier’s location and the place of supply are in the same State or same Union territory. Certain supplies are carved out — supplies to or by an SEZ developer or unit, imported goods until they cross the customs frontiers, and supplies to a tourist under Section 15. Explanations treat separate establishments (in and outside India, in and outside a State or UT, or a registered business vertical) as establishments of distinct persons.
Legal effect / purpose
Marks out the transactions that attract CGST plus SGST or UTGST instead of IGST.
A shop and its customer both located in Tamil Nadu — the supplier’s location and the place of supply are in the same State, so it is an intra-State supply.
What it means
Where the location of the supplier or the place of supply is in the territorial waters, it is deemed to be in the coastal State or Union territory where the nearest point of the appropriate baseline is located.
Legal effect / purpose
Fixes a definite place for supplies connected with territorial waters so the tax can be assigned to a State or UT.
A supply taking place in territorial waters is treated as being in the coastal State or Union territory nearest to the baseline point.
Place of Supply of Goods or Services or Both
Pinpoints where a supply is treated as happening — separately for goods and for services, and for purely domestic as well as cross-border situations.
What it means
Lays down rules to fix the place of supply of goods within India — where the supply involves movement, the place where the movement ends for delivery; ‘bill-to ship-to’ cases involving a third person; cases with no movement; goods assembled or installed at site; and goods supplied on board a conveyance. Where the place of supply cannot be determined, it is fixed as prescribed.
Legal effect / purpose
Identifies the State or UT that gets the tax and helps decide whether the supply is inter-State or intra-State.
Goods dispatched from a warehouse and delivered to a customer — the place of supply is the location where the movement of the goods ends for delivery to that customer.
What it means
For goods imported into India, the place of supply is the location of the importer; for goods exported from India, it is the location outside India.
Legal effect / purpose
Settles the place of supply for the cross-border movement of goods.
Goods imported by a business in Kolkata have their place of supply at the importer’s location in Kolkata.
What it means
Gives detailed rules for domestic services. The general rule is the recipient’s location if registered, otherwise the address on record or the supplier’s location. Special rules cover immovable property; hotel and event accommodation; restaurant, grooming, fitness and health services; training; admission to and organisation of events; transportation of goods and of passengers; on-board services; telecommunication; banking and financial services; insurance; and advertisement to government.
Legal effect / purpose
Pins down the place of supply for a wide range of services supplied within India.
A service supplied directly in relation to immovable property has its place of supply where that property is located.
What it means
Gives rules for cross-border services. The default is the recipient’s location, with exceptions — performance-based services and services needing physical presence (where performed); immovable property and events (where located or held); banking to account holders, intermediary services and short-term hire of means of transport (supplier’s location); transportation of goods (destination); passenger transport (place of embarking); on-board services; and OIDAR (recipient’s location). The Government may notify the place of effective use and enjoyment to prevent double or non-taxation.
Legal effect / purpose
Determines the place of supply when one party is abroad — central to taxing the export and import of services.
Online information and database access services supplied across borders have their place of supply at the recipient’s location.
What it means
For OIDAR services supplied by a person in a non-taxable territory to a non-taxable online recipient, the overseas supplier is liable to pay IGST. An intermediary in the non-taxable territory may be deemed the supplier unless it meets the listed conditions. The supplier takes a single registration under a Simplified Registration Scheme, and a representative or appointed person in the taxable territory may register and pay on the supplier’s behalf.
Legal effect / purpose
Brings overseas digital-service providers into the tax net for services supplied to consumers in India.
A foreign company streaming digital content to individual users in India is liable to pay IGST under the simplified registration scheme.
Refund of Integrated Tax to International Tourist
Lets an international visitor reclaim the IGST paid on goods that are carried out of India.
What it means
The IGST paid by a tourist on goods taken out of India is refundable, in the manner and subject to the conditions and safeguards prescribed. A ‘tourist’ is a person not normally resident in India who enters for a stay of not more than six months for legitimate non-immigrant purposes.
Legal effect / purpose
Allows international tourists to recover the IGST borne on goods they carry abroad.
A foreign visitor who buys goods in India and carries them out of the country may claim a refund of the IGST paid, as prescribed.
Zero Rated Supply
Keeps exports and SEZ supplies free of tax while still preserving the related input tax credit.
What it means
Defines zero-rated supply as the export of goods or services, and supplies to an SEZ developer or unit. Input tax credit may be availed for making zero-rated supplies even if the supply is otherwise exempt. A registered person may claim refund either by supplying under bond or Letter of Undertaking without paying IGST and claiming refund of unutilised input tax credit, or by paying IGST and claiming refund of the tax paid.
Legal effect / purpose
Ensures exports and SEZ supplies bear no tax burden, keeping them competitive, while protecting the related input tax credit.
An exporter may supply under a Letter of Undertaking without paying IGST and then claim a refund of unutilised input tax credit.
Refund of zero-rated supplies is claimed in accordance with Section 54 of the CGST Act and the rules made thereunder.
Apportionment of Tax and Settlement of Funds
Shares IGST revenue between the Centre and the consuming State or UT, and settles credit transfers and wrongly-paid tax.
What it means
Sets out how the integrated tax paid to the Central Government is apportioned. In listed situations — supplies to an unregistered person or a composition taxpayer, supplies where ITC is not available, credit left unavailed after the annual-return due date, and the corresponding import cases — an amount equal to the central tax on a similar intra-State supply goes to the Central Government. The balance is apportioned to the State where the supply takes place (or to the Centre for a Union territory), with rules for cases where the place of supply or the taxable person cannot be determined. Interest, penalty and compounding amounts follow the same apportionment.
Legal effect / purpose
Divides IGST revenue fairly between the Centre and the consuming State or UT — the destination principle in action.
For an inter-State supply to an unregistered person, an amount equal to the central tax on a similar intra-State supply is apportioned to the Central Government, and the balance to the destination State.
What it means
When the credit of integrated tax is used to pay central tax, Union territory tax or State tax, the amount collected as integrated tax is reduced and the Central Government transfers the equivalent amount to the respective tax account; the State tax portion is apportioned to the appropriate State Government.
Legal effect / purpose
Makes the cross-utilisation of IGST credit work within the inter-government fund-settlement mechanism.
When a business uses IGST credit to pay its central tax liability, an equal amount is transferred from the integrated tax account to the central tax account.
What it means
A registered person who paid IGST treating a supply as inter-State, which is later held to be intra-State, is granted refund of the IGST paid. A person who paid central tax and State or UT tax treating a supply as intra-State, which is later held to be inter-State, is not required to pay interest on the IGST due.
Legal effect / purpose
Protects taxpayers from interest and a double burden when the nature of a supply is later reclassified.
If a taxpayer pays IGST believing a supply was inter-State but it is later held to be intra-State, the IGST paid is refunded as prescribed.
Miscellaneous
Borrows the CGST machinery, handles transitional service imports, and carries the rule-making and removal-of-difficulties powers.
What it means
Applies a long list of CGST Act provisions — scope of supply, composite and mixed supply, time and value of supply, input tax credit, registration, invoices, accounts, returns, payment, TDS, TCS, assessment, refunds, audit, inspection and search, demands and recovery, liability in certain cases, advance ruling, appeals, offences and penalties, job work, e-commerce, transitional and miscellaneous provisions — to integrated tax, with necessary changes. TDS is at two per cent; TCS at a notified rate not exceeding two per cent; the value of a supply includes other taxes if separately charged; and penalty under this Act equals the total of the corresponding CGST and SGST or UTGST penalties.
Legal effect / purpose
Avoids re-writing the whole machinery — the CGST Act’s procedures run the IGST law as well.
The CGST Act’s registration and return provisions apply to integrated tax as if they had been enacted under the IGST Act.
What it means
Import of services made on or after the appointed day is taxable under this Act even if the transaction was initiated before that day. If tax on the import was already paid in full under the existing law, no further tax is payable; if paid only in part, the balance is payable.
Legal effect / purpose
A transitional rule deciding how ongoing service imports are taxed at the changeover to GST.
If a service import was begun before GST but completed afterwards, and no earlier tax was paid, IGST applies to it.
What it means
Empowers the Government, on the Council’s recommendation, to make rules to carry out the Act, including rules with retrospective effect from a date not earlier than commencement. A contravention of the rules may attract a penalty up to ten thousand rupees.
Legal effect / purpose
Enables delegated legislation to fill in the operational detail of the Act.
The Government may frame rules prescribing the procedure for matters the Act leaves to be prescribed.
What it means
Allows the Board, by notification, to make regulations consistent with the Act and the rules to carry out the Act’s provisions.
Legal effect / purpose
Lets the Board issue subordinate regulations within the framework set by the Act and the rules.
The Board may notify regulations to operationalise procedures under the Act.
What it means
Requires every rule, regulation and notification to be laid before each House of Parliament for thirty days. Parliament may agree to modify or annul them, without affecting anything already done under them.
Legal effect / purpose
Gives Parliament oversight over the delegated legislation made under the Act.
A rule made under the Act is placed before both Houses, which may agree to a modification in it.
What it means
If a difficulty arises in giving effect to any provision of the Act, the Government may, on the Council’s recommendation, make provisions by a general or special order to remove it — but no such order may be made after three years from commencement. Every such order is laid before each House of Parliament.
Legal effect / purpose
A temporary safety valve for smoothing teething problems in implementing the new law.
To resolve an implementation difficulty, the Government may issue a removal-of-difficulties order within the first three years.
Glossary of Key IGST Terms
Plain-language meanings of the terms you meet most often while reading the Act.
Integrated Tax (IGST)
The integrated goods and services tax levied under this Act on inter-State supplies of goods or services or both.
Inter-State Supply
Broadly, a supply where the location of the supplier and the place of supply are in different States or Union territories, plus imports, exports and SEZ supplies (Section 7).
Intra-State Supply
A supply where the supplier’s location and the place of supply are in the same State or Union territory (Section 8); it attracts CGST plus SGST or UTGST.
Place of Supply
The location at which a supply is treated as made, fixed by the rules in Sections 10 to 14, which decides the nature of the supply and the State entitled to the tax.
Zero-rated Supply
Export of goods or services, and supplies to an SEZ developer or unit, taxed at zero so the related input tax credit can be claimed or refunded (Section 16).
Export of Goods
Taking goods out of India to a place outside India.
Export of Services
Supply of a service where the supplier is in India, the recipient is outside India, the place of supply is outside India, payment is in convertible foreign exchange, and the two are not merely establishments of a distinct person.
Import of Goods
Bringing goods into India from a place outside India.
Import of Services
Supply of a service where the supplier is outside India, the recipient is in India, and the place of supply is in India.
Location of Supplier of Services
Usually the registered place of business from which the supply is made, or a fixed establishment, or the usual place of residence where neither exists (Section 2).
Location of Recipient of Services
Usually the registered place of business where the supply is received, or a fixed establishment, or the usual place of residence where neither exists (Section 2).
Fixed Establishment
A place, other than the registered place of business, with enough permanence and suitable human and technical resources to supply or receive and use services.
Intermediary
A broker or agent who arranges or facilitates a supply between two or more persons, but not a person who makes the supply on his own account.
OIDAR Services
Online information and database access or retrieval services — services delivered over the internet that are essentially automated and need minimal human intervention, such as cloud services, e-books and online gaming.
Non-Taxable Online Recipient
A Government, authority, individual or other unregistered person in the taxable territory who receives OIDAR services for a purpose other than business or profession.
Special Economic Zone (SEZ)
A zone given the meaning assigned under the Special Economic Zones Act, 2005; supplies to an SEZ developer or unit are zero-rated.
Customs Frontiers of India
The limits of a customs area as defined in the Customs Act, 1962.
Output Tax
The integrated tax chargeable on a taxable person’s taxable supplies, excluding tax payable by him on reverse charge.
Taxable Territory
The territory to which the provisions of this Act apply.
Continuous Journey
A journey for which one or more tickets are issued at the same time with no stopover between its legs, as defined in Section 2.
Apportionment of Tax
The mechanism (Section 17) by which collected IGST is divided between the Central Government and the consuming State or Union territory.
Letter of Undertaking (LUT)
A document under which an exporter may make zero-rated supplies without paying IGST and claim refund of unutilised input tax credit (Section 16).
Chapter Summary Cards
A one-glance recap of every chapter and the span of sections it covers.
Preliminary
Sets up the Act — its name and reach, and the definitions that the rest of the law depends on.
Administration
Names the officers who run the IGST law and lets State or Union territory officers act under it.
Levy and Collection of Tax
The charging part — it imposes IGST on inter-State supplies and allows the Government to grant exemptions.
Determination of Nature of Supply
The rules that decide whether a supply is inter-State (attracting IGST) or intra-State (attracting CGST plus SGST or UTGST).
Place of Supply of Goods or Services or Both
Pinpoints where a supply is treated as happening — separately for goods and for services, and for purely domestic as well as cross-border situations.
Refund of Integrated Tax to International Tourist
Lets an international visitor reclaim the IGST paid on goods that are carried out of India.
Zero Rated Supply
Keeps exports and SEZ supplies free of tax while still preserving the related input tax credit.
Apportionment of Tax and Settlement of Funds
Shares IGST revenue between the Centre and the consuming State or UT, and settles credit transfers and wrongly-paid tax.
Miscellaneous
Borrows the CGST machinery, handles transitional service imports, and carries the rule-making and removal-of-difficulties powers.
Whole Act at a Glance
Every chapter, its section range and the number of sections.
| Chapter | Title | Sections | Count |
|---|---|---|---|
| I | Preliminary | 1 – 2 | 2 |
| II | Administration | 3 – 4 | 2 |
| III | Levy and Collection of Tax | 5 – 6 | 2 |
| IV | Determination of Nature of Supply | 7 – 9 | 3 |
| V | Place of Supply of Goods or Services or Both | 10 – 14 | 5 |
| VI | Refund of Integrated Tax to International Tourist | 15 | 1 |
| VII | Zero Rated Supply | 16 | 1 |
| VIII | Apportionment of Tax and Settlement of Funds | 17 – 19 | 3 |
| IX | Miscellaneous | 20 – 25 | 6 |
Inter-State vs Intra-State Supply
The single most important distinction in the Act — it decides whether IGST or CGST + SGST applies.
| Point | Inter-State (IGST) | Intra-State (CGST + SGST/UTGST) |
|---|---|---|
| Core test | Supplier’s location and place of supply in different States / UTs | Supplier’s location and place of supply in the same State / UT |
| Tax charged | Integrated tax (IGST) | Central tax + State tax (CGST + SGST / UTGST) |
| Governing section | Section 7 | Section 8 |
| Imports till customs frontier | Treated as inter-State | Expressly excluded |
| SEZ developer / unit supplies | Treated as inter-State | Expressly excluded |
| Place of supply outside India | Treated as inter-State | Not applicable |