What is IGST (Integrated GST)?

GST collected by the Centre but assigned to the destination state, applied to inter-state supplies and imports of goods and services.

IGST (Integrated GST) meaning

IGST stands for Integrated Goods and Services Tax. It is the tax that applies to inter-state transactions in India. When a seller and buyer are in different states, the entire GST amount is collected by the Centre as IGST. The Centre then distributes the state’s share to the destination state.

How IGST Works

An inter-state supply is any transaction where the seller is in one state and the buyer is in another. IGST is charged on the full GST rate and remitted to the Centre. The Centre allocates the part that belongs to the buyer’s state.

IGST Rate Structure

The latest GST rates (effective 22 September 2025 after the 56th GST Council meeting) apply to IGST as the full rate:

Rate	IGST full	What it covers
0%	0%	Fresh produce, milk, bread, eggs
5%	5%	Sugar, tea, edible oil, packaged food
18%	18%	Most services, electronics, processed foods
40%	40%	Luxury and sin goods

The 12% and 28% slabs were abolished on 22 September 2025 and no longer apply.

Example of IGST in Action

Suppose a trader in Delhi sells goods worth Rs 2,00,000 to a buyer in Maharashtra. The GST rate is 18% = Rs 36,000.

IGST collected: Rs 36,000 (goes to the Centre)
The Centre then transfers the Maharashtra state’s share (the equivalent of SGST) to the Maharashtra government

The buyer pays Rs 2,36,000 total. The entire Rs 36,000 is shown as IGST on the invoice, not split into CGST and SGST.

IGST and Input Tax Credit

Businesses can claim input tax credit on IGST paid on purchases. The ITC of IGST can be used to set off against IGST collected on sales, or against CGST and SGST liability. This provides flexibility across state boundaries and simplifies working capital for businesses that trade across states.

What Is Treated as Inter-State

The following transactions are treated as inter-state and attract IGST:

Selling goods or services to a buyer in another state
Exporting goods or services outside India
Supplying goods or services to a Special Economic Zone (SEZ)
Online sales where the supplier is in one state and the customer is in another
Stock transfers between branches in different states

IGST Act

IGST is governed by the Integrated Goods and Services Tax Act 2017. Section 20 of the IGST Act sets out the rules for calculating IGST, the place of supply, and how input tax credit works across states.

Source: IGST Act 2017; 56th GST Council meeting, 3 September 2025.