Introduction

The Integrated Goods and Services Tax (IGST) Act, 2017 governs tax on inter-State trade and commerce in India. Section 2 of the Act defines key terms that form the foundation for compliance. Every business owner must understand these definitions to avoid errors in tax calculation and ensure smooth operations.
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Integrated Goods and Services Tax (IGST)

IGST is the tax on the supply of goods and services in inter-State trade. It applies to imports and exports, both treated as inter-State supplies under the law.

Inter-State Trade or Commerce

This covers supplies where the supplier and the place of supply are in different states or union territories. Imports and exports also fall under this category.

Import and Export of Goods

Import of goods means bringing goods into India from abroad. Export of goods means sending goods from India to a place outside the country. Exports qualify as zero-rated supplies under IGST.

Import and Export of Services

Import of services occurs when the supplier is abroad, the recipient is in India, and the place of supply is in India. Export of services occurs when the supplier is in India, the recipient is abroad, and payment is made in convertible foreign currency or Indian rupees as allowed by the RBI.

Supply

The term includes sale, transfer, barter, exchange, license, rental, lease, or disposal for consideration in business.

Intermediary

An intermediary is a broker, agent, or person who arranges or facilitates the supply between two or more parties but does not supply on their own account.

Place of Business

This refers to a location where business is regularly carried out. It can include warehouses, godowns, or any place where accounts are maintained.

Location of Supplier or Recipient of Services

This is the place where the supplier or recipient is located. It can be a fixed establishment or the usual place of residence, depending on the supply’s context.

Conclusion

Section 2 of the IGST Act lays the groundwork for correct tax application on inter-State and cross-border trade. Understanding these definitions helps businesses determine tax liability, claim input credits, and stay compliant. The IGST framework ensures a smooth credit flow between states, reducing tax cascading in inter-State supplies.