Section 5 of IGST Act 2017: Levy and Collection of Tax

Provisions under Section 5 of the Integrated Goods and Services Tax (IGST) Act, 2017 relating to “Levy and Collection of Tax”, are as under:

Section 5 of IGST Act 2017: Levy and Collection of Tax (CHAPTER III LEVY AND COLLECTION OF TAX)

(1) Subject to the provisions of sub-section (2), there shall be levied a tax called the integrated goods and services tax on all inter-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption, on the value determined under section 15 of the Central Goods and Services Tax Act and at such rates, not exceeding forty per cent, as may be notified by the Government on the recommendations of the Council and collected in such manner as may be prescribed and shall be paid by the taxable person:

Provided that the integrated tax on goods other than the goods as may be notified by the Government on the recommendations of the Council imported into India shall be levied and collected in accordance with the provisions of section 3 of the Customs Tariff Act, 1975 on the value as determined under the said Act at the point when duties of customs are levied on the said goods under section 12 of the Customs Act, 1962. [Note 2]

(2) The integrated tax on the supply of petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel shall be levied with effect from such date as may be notified by the Government on the recommendations of the Council.

(3) The Government may, on the recommendations of the Council, by notification, specify categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both.

(4) The integrated tax in respect of the supply of taxable goods or services or both by a supplier, who is not registered, to a registered person shall be paid by such person on reverse charge basis as the recipient and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both. [Refer Note 1]

(4) The Government may, on the recommendations of the Council, by notification, specify a class of registered persons who shall, in respect of supply of specified categories of goods or services or both received from an unregistered supplier, pay the tax on reverse charge basis as the recipient of such supply of goods or services or both, and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to such supply of goods or services or both. [Refer Note 1]

(5) The Government may, on the recommendations of the Council, by notification, specify categories of services, the tax on inter-State supplies of which shall be paid by the electronic commerce operator if such services are supplied through it, and all the provisions of this Act shall apply to such electronic commerce operator as if he is the supplier liable for paying the tax in relation to the supply of such services:

Provided that where an electronic commerce operator does not have a physical presence in the taxable territory, any person representing such electronic commerce operator for any purpose in the taxable territory shall be liable to pay tax:

Provided further that where an electronic commerce operator does not have a physical presence in the taxable territory and also does not have a representative in the said territory, such electronic commerce operator shall appoint a person in the taxable territory for the purpose of paying tax and such person shall be liable to pay tax.

Amendments History:

1. Sub-section (4) substituted vide Section 3 of the IGST (Amendment) Act, 2018: GOI Notification dt. 30/08/2018, followed with CBIC Notification on commencement date of 01/02/2019 vide Notification 1/2019 Integrated Tax dt. 29/01/2019. Thus the provisions to be applicable only for specified class of persons as the ‘Business vertical’ concept has been omitted.

2. Text inserted in proviso to sub-section (1) “other than the goods as may be notified by the Government on the recommendations of the Council”, vide the IGST Amendment Atc, 2023 (Notification dated 18/08/2023), pending notification on commencement date. 

Commentary on Section 5 of the IGST Act, 2017

Section 5 of the IGST Act, 2017 deals with the levy and collection of tax on inter-state supplies of goods or services or both.

Section 5(1) of the IGST Act

This sub-section mandates the imposition of an integrated goods and services tax (IGST) on all such inter-state supplies except for alcoholic liquor for human consumption. The tax is to be levied on the value of the goods or services as determined under section 15 of the Central Goods and Services Tax Act, 2017 (CGST Act) at rates not exceeding 40%, as notified by the government on the recommendations of the GST Council. The tax is to be collected in the manner prescribed and shall accordingly be paid by the taxable person.

However, the integrated tax on goods imported into India is to be levied and collected in accordance with the provisions of the Customs Tariff Act, 1975, on the value as determined under that Act when customs duty is levied on the goods under section 12 of the Customs Act, 1962.

Section 5(2) of the IGST Act

Sub-section (2) specifies that the integrated tax on the supply of petroleum crude, high speed diesel, motor spirit (petrol), natural gas and aviation turbine fuel shall be levied from a date notified by the government on the recommendations of the GST Council.

Section 5(3) of the IGST Act

Sub-section (3) allows the government, on the recommendations of the GST Council, to specify categories of goods or services on which tax shall be paid on a reverse charge basis by the recipient of such goods or services. All the provisions of the IGST Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services.

Section 5(4) of the IGST Act

Sub-section (4) allows the government, on the recommendations of the GST Council, to specify a class of registered persons who shall pay the tax on reverse charge basis as the recipient of specified categories of goods or services received from an unregistered supplier. Again, all the provisions of the IGST Act shall apply to such recipient as if he is the person liable for paying the tax in relation to such supply of goods or services.

Section 5(5) of the IGST Act

Finally, sub-section (5) allows the government, on the recommendations of the GST Council, to specify categories of services on which tax on inter-state supplies shall be paid by the electronic commerce operator (ECO) if such services are supplied through it. The ECO shall be liable to pay the tax as if it were the supplier liable for paying the tax in relation to the supply of such services. However, if the ECO does not have a physical presence in the taxable territory, any person representing it shall be liable to pay the tax. If the ECO does not have a physical presence or a representative in the taxable territory, it shall appoint a person in the taxable territory for the purpose of paying tax, and such person shall be liable to pay the tax.

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Note: The IGST Act 2017 has been notified vide GOI Notification dated 12/04/2017, which has subsequently been amended through IGST Extension to J&K Act 2017, IGST (Amendment) Act 2018. Finance Act 2019, Finance Act 2020, Finance Act 2021, Finance Act, 2022 and Finance Act, 2023, including various Notifications issued by the Govt./ CBIC from time to time, relating to the commencement dates of various Sections/ Provisions in the respective IGST/ Amendment Acts, wherever required. Information on this page is a Section-wise compilation of the Amendments made by various Notifications issued by CBIC from time to time, with best possible efforts for accuracy. In any case, E&OE. For official/ updated information, please visit CBIC website.