What is 'Inter-State' Supply in GST?

When a massive business sells a product in India, the type of GST tax they must legally charge their massive customer completely depends on geography. In the massive Indian GST law, all business sales are strictly divided into two massive categories: Inter-State and Intra-State.

Question (Click to Flip)

What happens if a Delhi business sells to a massive Delhi customer?

Answer

Since the heavy border was not crossed, it is strictly an Intra-State sale. The massive seller will charge exactly 9% CGST and 9% SGST (if the massive total tax rate is 18%).

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Key Facts

In massive GST law, physically importing goods from a massive foreign country (like buying heavy machinery from China) is legally treated exactly as an Inter-State supply, and heavy IGST is charged at the massive customs port.

Even if the massive seller and buyer are in the exact same state, but the sale is made to a highly secure SEZ (Special Economic Zone), the massive government treats it as an Inter-State sale.

1. What is an Inter-State Sale?

Inter means 'Between'.
Definition: An 'Inter-State' supply heavily occurs when the physical massive location of the supplier (seller) and the physical location of the massive buyer are in two completely different States or Union Territories.
Example: A massive factory located in Mumbai (Maharashtra) sells and physically ships 500 massive laptops to a shop owner in Bangalore (Karnataka). Because the goods massively crossed the state border, this is strictly an 'Inter-State' sale.

2. Which GST is Applied? (IGST)

For every massive Inter-State sale, the government legally forces the seller to charge exactly one massive combined tax called the IGST (Integrated Goods and Services Tax).
The entire massive IGST money is collected directly by the Central Government in Delhi. Later, the Central Government physically shares this massive money with the specific state where the massive goods were ultimately consumed.

3. The Opposite: Intra-State

Intra means 'Within'.
If a massive factory in Mumbai sells laptops to a shop in Pune (both cities are inside the exact same state of Maharashtra), it is an Intra-State sale.
In this case, the massive tax is split into two halves: CGST (Central GST) and SGST (State GST).

Questions and Answers

What happens if a Delhi business sells to a massive Delhi customer?+

Since the heavy border was not crossed, it is strictly an **Intra-State** sale. The massive seller will charge exactly 9% CGST and 9% SGST (if the massive total tax rate is 18%).

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