IGST, or Integrated Goods and Services Tax, is the GST charged on supplies that cross state lines and on imports into India. It is collected by the central government and then shared with the state where the goods or services are consumed. The rate is the same as the combined central and state GST on the same item, which since 22 September 2025 means 5% or 18% for most things and 40% for a few luxury and sin goods.
GST replaced a patchwork of central and state taxes in July 2017. Inside a state, a sale attracts two taxes at once: CGST for the centre and SGST for the state, each at half the total rate. Between states, that split would not work, since the selling state and the buying state would both want their half. IGST solves this. One tax, at the full rate, is charged on the inter-state sale, collected by the centre, and the state share is passed to the destination state. The buyer pays the same total tax either way.
When IGST applies
IGST is charged when the supplier and the place of supply are in different states. A manufacturer in Gujarat selling to a dealer in Maharashtra charges IGST. A software company in Karnataka billing a client in Delhi charges IGST. It also applies to every import of goods, where it is collected by customs along with basic customs duty, and to imports of services, where the Indian recipient pays it under reverse charge. Supplies to and from special economic zones are treated as inter-state and attract IGST even when the zone is in the same state.
The rates
IGST has no rates of its own. It mirrors the combined CGST plus SGST rate for the item. The GST Council cut the slab structure from four rates to two on 22 September 2025. Most goods and services now fall in either 5% or 18%, with a 40% rate reserved for items such as tobacco, pan masala, aerated drinks and high-end cars. A few essentials are exempt. So an inter-state sale of a Rs 1,00,000 machine at the 18% rate carries IGST of Rs 18,000. The same sale within a state would carry CGST of Rs 9,000 and SGST of Rs 9,000.
Input tax credit
The buyer in the example above can claim the Rs 18,000 as input tax credit against the GST it collects on its own sales. The credit rules follow a set order. IGST credit is used first against IGST owed, then against CGST, then against SGST. CGST credit cannot be set against SGST or the other way round. For a business that buys from other states and sells within its own, this ordering decides how much cash tax it pays each month, and getting it wrong is a common cause of blocked credit.
Why it matters to an investor or trader
For a company, IGST is mostly a cash flow matter rather than a cost, since credit flows through. It becomes a real expense only where credit is blocked, such as on certain motor vehicles or employee benefits. In financial statements it shows up in the tax balances under current assets and liabilities, and a growing pile of unclaimed GST credit is worth a question.
For a trader, GST reaches the contract note. Securities themselves are outside GST, so there is no tax on the value of a share bought or sold. But the broker's services are taxed at 18%. Whether that appears as CGST plus SGST or as IGST depends on whether the broker and the client are registered in the same state. The amount is the same. What is and is not taxed on a trade is set out in GST on share trading and F&O.
FAQs
Who collects IGST?
The central government. It then transfers the state's share to the state where the goods or services were consumed.
Is IGST charged on exports?
Exports are zero-rated. An exporter either ships under a bond without paying IGST or pays it and claims a refund.
Is IGST a separate cost on imports?
It is paid at import but is available as input tax credit to a registered business, so it is not a final cost except for consumers and unregistered buyers.
What is the IGST rate on a mobile phone?
Whatever the GST rate on phones is at the time, charged in full as IGST on an inter-state or imported sale. Rates are set by the GST Council and change from time to time.