Intra-state supply refers to the flow of goods and services within a state. When the location of the supplier and the place of receipt are the same, the sale is an intra-state supply. This means the seller must collect the applicable Central Goods and Services Tax (CGST) from the buyer.
Intra-state supply
Intra-state supply is a kind of business transaction where goods or services are supplied from one state or union territory to another. It is a different type of taxation than interstate supply and depends on the nature of the supply. For instance, if the supplier resides in Uttar Pradesh but the buyer is in Delhi, the supply is intra-state.
GST is an indirect tax on the supply of goods and services, and a supply is tagged as intra-state or inter-state, based on whether it is made from one state to another. As per the GST Act 2017, inter-state supplies are subject to a consolidated tax imposed by the Central Government, while intra-state supplies are subject to state taxes.
Intra-state supply tax
The Intra-State Supply Tax is a form of indirect tax on the supply of goods and services. It applies to inter-state supplies as well as intra-state supplies. An inter-state supply occurs when goods originate in one state and are sold in another state. The GST Act 2017 imposes a consolidated tax on inter-state supplies while an intra-state supply tax is applicable to supplies within the same state.
Intra-state supply tax applies when a seller provides a product or service to a customer in another state. This means that the supplier must collect both the CGST and SGST from the customer. This tax is triggered when the goods are transported between states, union territories, or a country. Many products delivered to India are inter-state supplies. Other types of inter-state supplies include the transportation of goods from an exclusive economic zone or a specific development zone into another state.
Location of supplier and receiver
The location of a supplier and receiver are relevant for the assessment of a transaction as an intra-state supply. Unless there are special circumstances that prevent the use of such a definition, a supply is treated as intra-state if it is made to a person who is a resident of the same state.
The place of supply is usually the place where the supply is made, or the location of the supplier's principal place of business as specified on the GST registration certificate. However, a supplier who makes the supply from multiple locations may treat each location according to how it reflects the supply. If an individual is unable to identify the location of a supplier, the usual place of residence of the individual making the supply is used.
For example, suppose a business X Ltd. is a Delhi-based leading software development company. It has offices in Mumbai and New Delhi. Radhika receives a pair of tickets to a fashion show in Bangalore and is a resident of Mumbai. She pays Y & Co. Rs. 4 lakh for the event. In this scenario, the location of the supplier and receiver is the same, and the place of supply is Mumbai.
GST rates
The GST rate for intra-state supply is the same as that for inter-state supplies. Unless a particular transaction is exempt, a supply to an individual or business within a state or union territory is considered intra-state. There are certain exceptions, however, and these are discussed below.
Currently, alcohol and tobacco products are outside of the GST ambit. However, petroleum products are expected to be included at a later date. Similarly, electricity duty and stamp duty are not covered by the GST. These items are subject to state and local excise duty. Whether a product is subject to GST depends on its use, origin, and value.
Currently, the GST rate for mobile phones is 18%. Besides, the item is subject to an additional charge called a cess. This is to compensate for the additional cost of the GST implementation. Goods and services in India are classified under the SAC Code System, which is used in nearly 200 countries.
GST rates for inter-state supplies
The GST rates on inter-state supplies are different from the rates on intrastate supplies. In the case of intrastate supplies, the supplier's position and the location of the buyer are in the same state. In this scenario, the GST rate on the intrastate supply is the same as the rate on the IGST.
GST rates on inter-state supplies will depend on the type of supply. Inter-state supplies include interstate trade and interstate imports. The GST Council has specified rates for these types of supplies. As per the IGST Act, the rate on these supplies cannot exceed 40 percent. Alcoholic beverages for human consumption are exempt from GST.
A trader in Andaman, for example, may supply goods to a trader in Chandigarh. That trader will be liable for the IGST on that supply. But the GST rate on footwear is 5%/18% of the transaction value. Similarly, the GST rate on flexible intermediate bulk containers will be 12%. In addition, vehicles imported for temporary purposes will be exempt from the IGST.