IGST Full Form – Integrated Goods and Services Tax

IGST Full Form: GST (Goods and Services Tax) is not a single tax. GST actually includes three different components based on the location of the sale: Central GST (CGST), State GST (SGST), and Integrated GST (IGST).

When goods or services are sold within the same state, both CGST and SGST are charged. CGST is collected by the central government, and SGST is collected by the state government in this case.

IGST applies when goods or services are sold from one state to another. The central government collects IGST, and later shares the appropriate portion with the state where the goods or services are consumed.

This article will focus on the IGST Full Form, Integrated Goods and Services Tax which plays a crucial role in maintaining a fair and uniform system for interstate trade across the country.

Must Check – List of All Full Form

What is the Full Form of IGST?

The full form of IGST is Integrated Goods and Services Tax.

What is IGST?

IGST means Integrated Goods and Services Tax. This kind of tax is imposed when products or services are transported between Indian states. For instance, IGST will be charged if a product is manufactured in Maharashtra and sold in Delhi. IGST can be conceptualised as follows:

IGST = CGST + SGST

This indicates that the central government tax (CGST) and the state government tax (SGST) are the two components of the IGST. However, the central government collects the entire tax first in the case of IGST. The state that received the goods or services later receives the state’s portion of the tax from the federal government.

The central government occasionally distributes the tax equally among all the states when it is unclear which state should be responsible for collecting it (such as when goods pass through multiple states).

Also Check: GOAT Full Form

When is IGST Charged?

IGST, or Integrated Goods and Services Tax, is used when goods or services are sent from one state to another. This means IGST is charged when something moves outside the state where it was made or sold.

Let’s understand with a simple example. Imagine a company in Chennai (Tamil Nadu) sells laptops to a customer in Mumbai (Maharashtra). Since the laptops are moving from Tamil Nadu to Maharashtra, IGST will be charged on this sale. But if the company sells those laptops to someone inside Tamil Nadu, then IGST will not be charged.

IGST is used in four main situations:

When goods or services move between two different states or union territories, IGST is added to the bill, and the company pays this tax to the Central Government.

For imports and exports

If something is brought into India (imported), IGST is charged along with customs tax.
If something is sent out of India (exported), IGST is not charged directly. Exporters can get a refund later or avoid paying IGST using a special permission (called LUT or bond). This makes exports tax-free or zero-rated.

• Supplies to Special Economic Zones (SEZs): SEZs are special places treated like they are outside India for tax purposes. If goods or services go to or from an SEZ, IGST is charged, even if both are in the same state.
• Supplies to Export-Oriented Units (EOUs): These are special factories that make products only to sell outside India. Just like SEZs, selling goods or services to or from these units attracts IGST.

Also Check: BCE Full Form

IGST Rate Structure

IGST is a mix of Central GST (CGST) and State GST (SGST). The tax rate depends on what type of goods or services are being sold. Some items have lower tax because they are used daily, while luxury items have higher tax.

Main Features of IGST

IGST, which means Integrated Goods and Services Tax, has some special features that make it different from other taxes. Check below points for main featured of IGST:

• Tax on Sales Between States: IGST is charged when goods or services are sold from one state to another, from a state to a union territory (UT), or between two UTs.
• Same Tax Rate Everywhere in India: Earlier, every state had different taxes. Now, with IGST, the same tax rate is charged in all states when goods move from one state to another.
• Businesses Can Get Back Tax Paid (ITC): If a business pays IGST while buying goods from another state, it can get that money back as Input Tax Credit (ITC). This helps save money.
• Tax Goes to the Right State: The central government collects IGST first. Later, the tax is sent to the state where the goods are finally used. This is called the destination principle.

Also Check: NDA Full Form

How to Calculate IGST?

Imagine a company in Chennai (Tamil Nadu) sells laptops worth ₹1,00,000 to a customer in Mumbai (Maharashtra). Since the laptops are moving from one state to another, IGST will be charged. Check formula to calculate IGST:

IGST = Product Price × IGST Rate

In this case:

Product Price = ₹1,00,000
IGST Rate = 18% (because laptops fall under 18% GST slab)

So,

IGST = ₹1,00,000 × 18% = ₹18,000
Now, the total price the customer has to pay will be:
₹1,00,000 + ₹18,000 = ₹1,18,000

Out of this ₹18,000 IGST:

• ₹9,000 goes to the Central Government.
• ₹9,000 goes to the Maharashtra State Government, where the customer lives.

Also Check: RCA Full Form

Benefits of IGST

IGST, which stands for Integrated Goods and Services Tax, is helpful for the government, businesses, and even customers. Below are the simple benefits of IGST:

• Easy for the Government: IGST helps both the Central Government and State Governments easily collect and manage taxes. It makes tax collection simple and clear.
• Same Tax in All States: Before GST, every state had its own tax rules. This caused confusion for businesses. Now, with IGST, there is one tax rate across India when goods move between states. This helps businesses sell easily in any part of the country.
• Less Tax for Customers: Since the tax system is the same everywhere, companies save money. This makes products cheaper for customers, as businesses don’t have to pay extra taxes.
• Easy to Get Tax Refund (ITC): When businesses buy goods from another state and pay IGST, they can easily get the tax money back. This is called Input Tax Credit (ITC). It helps businesses save money and avoid paying tax twice.

How Can Businesses Get Back IGST Paid?

When a business buys goods from another state, it pays IGST. But the good news is that businesses can get this tax money back. This is called Input Tax Credit (ITC). Check information below to understand how businesses can claim this money easily:

1. Business Must Be GST Registered: Only businesses that have a GST number can ask for their tax money back.

2. Invoice Should Have All Details: The seller must give a proper bill (invoice). This bill should clearly show:

• The IGST rate used
• The total IGST amount paid
• The HSN code of the product
• Other important details

3. Buyer Must Accept the Invoice Online: The buyer needs to accept the bill online on the official GST portal. This can be done using the IMS dashboard on the GST website.

4. File GST Returns on Time: The business must fill and submit its GST return form (GSTR-3B) on time for the month in which they bought the goods.

Example of IGST

A company named Creative Creations is in Kolkata, West Bengal. This company makes and sells beautiful handcrafted sarees all over India using online orders.
In March 2025, a customer from Chennai, Tamil Nadu, bought sarees from Creative Creations. The total price of the sarees was ₹10,000. Since the sarees were being sent from West Bengal to Tamil Nadu, it is called an inter-state sale. In such cases, IGST is applied.

The IGST rate for sarees is 12%.

Now, let’s calculate IGST easily:

12% of ₹10,000 = ₹1,200

This means Creative Creations added ₹1,200 as IGST to the customer’s bill.

So, the total amount the customer paid was:

₹10,000 (saree price) + ₹1,200 (IGST) = ₹11,200

Creative Creations collected ₹1,200 as IGST and gave this tax amount to the central government. Later, the central government shares the tax with Tamil Nadu, where the customer lives.

Refund of IGST

Sometimes, businesses pay extra IGST by mistake or in special cases. When this happens, they can ask the government to give their extra money back. This is called a refund of IGST.

This mostly happens with companies that export goods to other countries or work inside Special Economic Zones (SEZs) or Export-Oriented Units (EOUs). In India, when products are sent to other countries, they are called exports, and exports are zero-rated. This means no GST needs to be paid if the company has special permission called a Letter of Undertaking (LoU).

But sometimes, exporters pay IGST on raw materials or things used to make their products. In such cases, they can apply for a refund to get back the extra IGST they paid. The government will check their bills and papers and return the extra money.

IGST Full Form FAQs

What is IGST (Integrated Goods and Services Tax)?

IGST is a tax charged on goods and services moved from one state to another, collected by the central government.

Is IGST 18%?

Yes, IGST can be 18% for many goods and services, depending on the product category.

What is IGST vs CGST?

IGST is applied on inter-state sales, while CGST is charged on sales within the same state.

How is IGST tax calculated?

IGST is calculated as: IGST = Product Price × IGST Rate.