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CA Intermediate · Taxation · GST in India - An Introduction

Mehta Traders, a registered dealer in Surat, sells goods to a buyer in Jaipur (Rajasthan). The goods move from Surat to Jaipur. Under the GST framework, which tax will be levied on this supply, and which government will receive the revenue?

IGST applies because the supply is inter-State, from Gujarat to Rajasthan. Since GST is a destination-based consumption tax, the State share of the revenue goes to Rajasthan, where the goods are consumed, and the Centre keeps its share. Gujarat, the origin State, does not retain the revenue.

  1. ACGST and SGST, shared between Gujarat and Rajasthan
  2. BIGST, with the revenue apportioned between the Centre and Rajasthan as the destination StateCorrect
  3. CCGST and SGST, both collected by the Centre and paid to Gujarat
  4. DIGST, with the whole revenue retained by Gujarat as the origin State

Explanation

Goods move from Gujarat to Rajasthan, so this is an inter-State supply and IGST is levied. GST is a destination-based consumption tax, so the State share of the revenue goes to the State of consumption, Rajasthan, and the rest to the Centre. Option D is wrong because the origin State does not retain the revenue.

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