What it means
When the supplier’s state and the place of supply differ, the sale is inter-state and carries IGST at the full rate. The Centre collects it and passes the state’s share to the state where the goods or services are consumed. Exports and supplies to SEZ units are treated as inter-state too.
Example
Kaveri Agencies, Mysuru (Karnataka) sells goods worth ₹50,000 at 18% to Annai Traders, Chennai (Tamil Nadu).
| Line | Amount |
|---|---|
| Taxable value | ₹50,000 |
| IGST 18% | ₹9,000 |
| Invoice total | ₹59,000 |
Annai Traders takes ₹9,000 as IGST input tax credit. IGST credit is used first against IGST owed, then against CGST and SGST, in the order the law sets.
Common mistakes
- Splitting an inter-state sale into CGST 9% + SGST 9%. The tax goes to the wrong government; paying it again as IGST and claiming a refund of the wrong tax takes months.
- Deciding by the buyer’s billing city alone when the goods go elsewhere.
- Forgetting that a sale to an SEZ unit in your own state is still IGST.
In MyRecords
Since 1 Nov 2026 MyRecords checks the tax kind against the place of supply on quotations, orders, deliveries, invoices and purchase documents. A party in another state, an SEZ unit or an overseas party gets the IGST template of the same rate; a wrong kind of tax is switched or refused before you save. IGST then flows into the right GSTR-1 tables and GSTR-3B table 3.1.