GST Tutorial | IGST Tax Apportionment and Funds Settlement

IGST Tax Apportionment and Funds Settlement | GST

IGST Tax Apportionment and Funds Settlement involves provisions, as

Section 15. Apportionment of tax collected under the Act and settlement of funds

(1) Out of the IGST paid to the Central Government in respect of inter-State supply of goods and/or services to an unregistered person or to a taxable person paying tax under section 9 of the CGST Act, 2016 the amount of tax calculated at the rate equivalent to the CGST on similar intra-state supply shall be apportioned to the Central Government.

(2) Out of the IGST paid to the Central Government in respect of inter-State supply of goods and/or services where such taxable person is not eligible for input tax credit, the amount of tax calculated at the rate equivalent to the CGST on similar intra- State supply shall be apportioned to the Central Government.

(3) Out of the IGST paid to the Central Government in respect of inter-State supply of goods and/or services made in a year to a registered taxable person, where he does not avail of the said credit within the specified period and thus remains in the IGST account after expiry of the due date for filing of annual return for such year in which the supply was made, the amount of tax calculated at the rate equivalent to the CGST on similar intra-State supply shall be apportioned to the Central Government.

(4) Out of the IGST paid to the Central Government in respect of import of goods and / or services by an unregistered person or by a taxable person paying tax under section 9 of the CGST Act, 2016 the amount of tax calculated at the rate equivalent to the CGST on similar intra-State supply shall be apportioned to the Central Government.

(5) Out of the IGST paid to the Central Government in respect of import of goods and / or services, where the such taxable person is not eligible for input tax credit, the amount of tax calculated at the rate equivalent to the CGST on similar intra- State supply shall be apportioned to the Central Government.

(6) Out of the IGST paid to the Central Government in respect of import of goods and / or services made in a year by a registered taxable person, where he does not avail of the said credit within the specified period and thus remains in the IGST account after expiry of the due date for filing of annual return for such year in which the supply was received, the amount of tax calculated at the rate equivalent to the CGST on similar intra-State supply shall be apportioned to the Central Government.

(7) The balance amount of tax remaining in the IGST account in respect of the supply for which an apportionment to the Central Government has been done under sub- section (1), (2), (3), (4), (5) or (6) shall be apportioned to the State where such supply takes place as per sections 7, 8, 9 or 10:

PROVIDED that where the place of such supply made by any taxable person cannot be determined separately, the said balance amount shall be apportioned to each of the States to which such taxable person has made supplies during the financial year in the proportion of the total supplies made to each of such States:

PROVIDED FURTHER that where the taxable person making such supplies cannot be determined, the said balance amount shall be apportioned to all States as per the order made by the President under clause (2) of Article 270.

(8) The provisions of sub-sections (1), (2), (3), (4), (5), (6) and (7) relating to apportionment of tax shall mutatis mutandis apply to the apportionment of interest, penalty and compounding amount realized in connection with the tax so apportioned.

(9) Where an amount has been apportioned to the Central Government or a State Government under sub-sections (1), (2), (3), (4), (5), (6), (7) and (8) the amount collected as IGST shall stand reduced by an amount equal to the amount so apportioned and the Central Government shall transfer to the CGST account an amount equal to an amount apportioned to the Central Government and shall transfer to the SGST account of the State an amount equal to an amount apportioned to that State, in the manner and time as may be prescribed.

(10) Any IGST amount apportioned to a State, if subsequently found refundable to any person and refunded to such person, shall be reduced from the amount apportioned to such State under this section or otherwise, in the manner and time as may be prescribed.

Zero Rated Supply

Section 16. Zero rated supply

(1) “zero rated supply” means any of following taxable supply of goods and/or services, namely –

(a) export of goods and/or services; or

(b) supply of goods and/or services to a SEZ developer or an SEZ unit.

(2) Subject to provisions of sub-section (3) of section 17 of the CGST Act, 2016, credit of input tax may be availed for making zero-rated supplies, notwithstanding that such supply may be an exempt supply.

(3) A registered taxable person exporting goods or services shall be eligible to claim refund under one of the following two options, namely –

(a) a registered taxable person may export goods or services under bond, subject to such conditions, safeguards and procedure as may be prescribed in this regard, without payment of IGST and claim refund of unutilized input tax credit in accordance with provisions of section 48 of

the CGST Act, 2016 read with rules made thereunder;

(b) a registered taxable person may export goods or services, subject to such conditions, safeguards and procedure as may be prescribed in this regard, on payment of IGST and claim refund of IGST paid on goods and services exported in accordance with provisions of section 48 of the CGST Act, 2016 read with rules made thereunder.

(4) The SEZ developer or SEZ unit receiving zero rated supply specified in clause (a) of sub-section (1) shall be eligible, subject to the conditions, safeguards and procedure as may be prescribed in this regard, to claim refund of IGST paid by the registered taxable person on such supply.