How GST Impacts Inter-State and Intra-State Supply of Goods & Services (2025 Guide)
Published on: August 30, 2025 | By: Your Blog Name
📌 Introduction to GST & Supply Types
The Goods and Services Tax (GST) has redefined the way taxation works in India by removing multiple layers of indirect taxes. One of the most important aspects of GST is the distinction between inter-state supply and intra-state supply. This distinction determines whether CGST + SGST or IGST will be levied on a transaction.
🏠 Intra-State Supply Explained
Intra-state supply occurs when the supplier and buyer are located in the same state or union territory. In this case, the tax burden is split equally between the Centre and the State:
- CGST – Central GST, collected by the Central Government
- SGST/UTGST – State GST or Union Territory GST, collected by the State/UT Government
Example: A trader in Delhi sells goods worth ₹1,00,000 to a customer in Delhi. GST rate is 18%. → CGST = ₹9,000, SGST = ₹9,000. Total invoice = ₹1,18,000.
🌏 Inter-State Supply Explained
Inter-state supply occurs when the supplier and buyer are in different states or union territories. In this case, Integrated GST (IGST) is charged.
Example: A trader in Delhi sells goods worth ₹1,00,000 to a customer in Maharashtra. GST rate is 18%. → IGST = ₹18,000. Total invoice = ₹1,18,000.
The IGST collected by the Centre is later distributed to the destination state, ensuring a destination-based tax system.
📊 Practical Examples of GST Supply
- Restaurant in Delhi serving a Delhi customer → Intra-State (CGST + SGST)
- Manufacturer in Gujarat supplying to Karnataka → Inter-State (IGST)
- Import of machinery from Germany → Inter-State (IGST + Customs)
- Export of garments to USA → Zero-rated supply (Refund available)
🚢 GST on Imports & Exports
Imports are always treated as inter-state supply, attracting IGST along with applicable customs duties. Exports, on the other hand, are treated as zero-rated supply. Exporters can either export goods without payment of GST under a bond/letter of undertaking or pay IGST and claim a refund.
📋 Comparison: Inter-State vs Intra-State GST
| Criteria | Intra-State Supply | Inter-State Supply |
|---|---|---|
| Tax Type | CGST + SGST/UTGST | IGST |
| Authority | Shared between Centre & State | Collected by Centre, shared with States |
| Example | Delhi → Delhi | Delhi → Maharashtra |
| Imports/Exports | Not applicable | Imports = IGST, Exports = Zero-rated |
📌 Case Studies
Case Study 1: FMCG Distributor
A distributor in Maharashtra selling to retailers within Maharashtra charges CGST + SGST. When expanding sales to Gujarat, IGST applies.
This required upgrading invoicing systems and training staff.
Case Study 2: E-commerce Seller
An online seller based in Delhi ships products to customers across India. All supplies outside Delhi attract IGST, while local deliveries attract CGST + SGST.
Platforms like Amazon & Flipkart automate these GST distinctions for compliance.
💡 Impact on Businesses & Consumers
- Businesses must identify correct supply type for proper invoicing.
- ITC (Input Tax Credit) flow is smoother under IGST, reducing cascading taxes.
- Consumers benefit from uniform tax rates across states.
- Compliance has improved due to e-way bills and automated GST systems.
❓ Frequently Asked Questions (FAQ)
1. What is intra-state supply under GST?
It means supplier and buyer are in the same state. Taxes levied: CGST + SGST/UTGST.
2. What is inter-state supply under GST?
It means supplier and buyer are in different states/UTs. Tax levied: IGST.
3. Is GST different for services and goods?
No, the principles of intra-state and inter-state supply apply equally to goods and services.
4. What is the GST treatment of imports?
Imports are considered inter-state supply. IGST is levied along with customs duties.
5. Are exports exempted under GST?
Yes, exports are treated as zero-rated supply. Exporters can claim refunds on ITC or IGST paid.
✅ Conclusion
The impact of GST on inter-state and intra-state supply is a cornerstone of India's unified tax system. While intra-state supply involves CGST + SGST, inter-state supply levies IGST. This ensures that revenue is shared fairly between Centre and States while keeping compliance simple for businesses. Understanding these rules helps both enterprises and consumers navigate GST with confidence in 2025 and beyond.