GST is a uniform tax that is levied on all goods and services to put an end to the following problems – Central exercise, Luxury Tax, Service Tax, VAT, Entertainment Tax, and Entry Tax.
India has derived very much from GST. The most important gain is the abolition of inter-state check posts erected to enforce taxes on cross border transactions.
There are three forms of GST i.e. – CGST, SGST, IGST.
- CGST’s full form is central goods and services tax
- SGST’s full form states goods and services tax.
- IGST’s full form is integrated goods and services tax.
When the supplier and client are in different states, it is called the Inter-State supply of goods and services. It is also the case of import and export, the transition is called the Inter-State supply of goods and services. Hence, the supplier has to pay IGST. (Integrated Goods and Services Tax)
It is also essential to understand the difference between GST and IGST as they are using interchangeably by many people. GST is a percentage of income generated from profit or loss of selling goods or services, which is payable on completing the business. On the other hand, IGST will be levied upon the supplier in both the cases, i.e. import to India or export from India.
GST vs IGST
The main difference between GST and IGST is that GST is applied to any kind of supply or delivery of any kind of goods or services whereas IGST is a type of GST which is needed to be paid by the supplier in case of the interstate supply of goods and services.
Comparison Table Between GST and IGST (in Tabular Form)
| Parameter of Comparison | GST | IGST |
|---|---|---|
| Implication | GST can also be said a type of indirect tax which is levied on the sale of Goods and Service in India. | IGST is a type of GST which is needed to be paid by the supplier in case of an interstate supply of goods and services. |
| Importance | The introduction of GST establishes the common unified national market, which attracts foreign investments in the Indian business sector. | On the other hand, IGST will be levied upon the supplier in both the cases, i.e. import to India or export from India. |
| Main features | GST harmonizes the indirect taxation system throughout India by subsuming various taxes into one .hence it minimizes the administrative burden of government. | · Exports will be rated at zero percent. · Central as well as the State govt. will share the tax. · IGST = CGST + SGST |
| Disadvantages | · Many services became costlier like Air tickets, courier service, and School fees. · It arises complexity for business Plans. · It is a little bit confusing form of taxation in some sectors. | · It increases the optional costs of the taxpayers of the country. · It can be robbed by people as it is an online taxation system, which can be hacked. |
| Advantages | · GST replaces all major indirect taxes. · It will remove the ‘Cascading Effect’. · It reduces the flow of black money. | · It is a simple model that is also transparent. · Increases the pace of the taxpayer process in the country. |
What is GST?
GST is a uniform tax which is levied on all goods and services put an end to the following problems –
- Central exercise
- Luxury Tax
- Service Tax
- VAT
- Entertainment Tax
- Entry Tax.
To understand the true value or meaning of GST, it is beneficial that we understand the current taxation system. Direct taxes, for example the income tax, are carried by the person who is liable for the tax.
The liability of the indirect tax can be declared to the other person.GST replaces all of the major forms of taxes present in the country by also removing the Cascading effect. At present, the Taxation System of the country which is an indirect form of tax can be classified as:
Central taxes: this form of tax is levied by the Central govt.
State taxes: this form of tax is levied by the different state governments. The current indirect tax has one major problem – the cascading effect. When the people of a country buy something, then they pay a tax on already paid tax.
What is IGST?
IGST is a type of GST which is needed to be paid by the supplier in case of an interstate supply of goods and services. IGST will be levied upon the supplier in both the cases, i.e. import to India or export from India.
Under IGST, exports will be rated at zero percent and also Central and State govt. will share the tax. In simple terms, we can say that, IGST = CGST + SGST
Advantages of IGST
- It is a simple model that is also transparent.
- Increases the pace of the taxpayer process in the country.
- It is the sum of CGST and SGST.
- The documents are not required to be checked physically, it can be done over the internet.
- No blockage of funds.
Main Differences Between GST and IGST
- The main difference between GST and IGST is that GST is a percentage of income tax that has to be paid to the ‘deductor’ when a profit or loss in the selling of goods and services is made. Whereas IGST is a type of GST which is needed to be paid by the supplier in case of an interstate supply of goods and services.
- GST is a type of indirect tax to be paid to deduct or whereas IGST is a total of State and Central Goods and Service Tax.
- GST has to be paid whether the deductee made a profit or loss whereas, Under IGST, exports will be rated at zero percent and also Central and State govt. will share the tax.
- GST removes the problem caused by the Cascading Effect whereas IGST Increases the pace of the taxpayer process in the country.
- GST reduces the flow of black money in the market and on the other hand IGST ensures effective management in the field of Business to business i.e. B2B and business to consumer i.e. B2C transactions.
Conclusion
Whenever a business plan is made, there has to be a percentage of money to be levied upon the businessman to be paid to the respective Government. This percentage of money from the profit or loss incurred from the transaction is called Tax. In the current taxation system in India there was a problem with the Cascading Effect.
So to prevent such a thing to happen, the Government of India combined every type of Tax under a single Taxation System and that is called GST( Goods and Service Tax). When the supplier and client are in different states, it is called the Inter-State supply of goods and services. It is also the case of import and export, the transition is called the Inter-State supply of goods and services. Hence, the supplier has to pay IGST. (Integrated Goods and Services Tax)
References
- https://repository.up.ac.za/bitstream/handle/2263/32342/Cnossen_Preparing(2013).pdf?sequence=1
- https://books.google.com/books?hl=en&lr=&id=GoOWDwAAQBAJ&oi=fnd&pg=PA60&dq=GST+and+IGST&ots=Krh1okeW_z&sig=WU5tXiRMETdb34MmQlxh3n5a5dQ