Section 7 of IGST Act 2017: Inter State Supply

Provisions under Section 7 of the Integrated Goods and Services Tax (IGST) Act, 2017 relating to “Inter-State Supply”, are as under:

Section 7 of IGST Act 2017: Inter State Supply (CHAPTER IV – DETERMINATION OF NATURE OF SUPPLY)

(1) Subject to the provisions of section 10, supply of goods, where the location of the supplier and the place of supply are in–

(a) two different States;

(b) two different Union territories; or

(c) a State and a Union territory,

shall be treated as a supply of goods in the course of inter-State trade or commerce.

(2) Supply of goods imported into the territory of India, till they cross the customs frontiers of India, shall be treated to be a supply of goods in the course of inter-State trade or commerce.

(3) Subject to the provisions of section 12, supply of services, where the location of the supplier and the place of supply are in–

(a) two different States;

(b) two different Union territories; or

(c) a State and a Union territory,

shall be treated as a supply of services in the course of inter-State trade or commerce.

(4) Supply of services imported into the territory of India shall be treated to be a supply of services in the course of inter-State trade or commerce.

(5) Supply of goods or services or both,–

(a) when the supplier is located in India and the place of supply is outside India;

(b) to or by a Special Economic Zone developer or a Special Economic Zone unit; or

(c) in the taxable territory, not being an intra-State supply and not covered elsewhere in this section,

shall be treated to be a supply of goods or services or both in the course of inter-State trade or commerce.

Amendments History:

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Commentary on Section 7 of the IGST Act, 2017

Section 7 of the Integrated Goods and Services Tax (IGST) Act, 2017, is concerned with the determination of the nature of supply when it comes to inter-State supply. This section provides a set of rules for identifying when a supply of goods or services is considered an inter-State trade or commerce. The following commentary breaks down the key provisions of this section:

Section 7(1) of the IGST Act

A supply of goods is considered an inter-State trade or commerce if the location of the supplier and the place of supply fall under:

a) Two different States,

b) Two different Union territories, or

c) A State and a Union territory.

This provision is subject to Section 10, which deals with place of supply of goods.

Section 7(2) of the IGST Act

Imported goods are treated as inter-State trade or commerce until they cross the customs frontiers of India.

Section 7(3) of the IGST Act

Similar to sub-section (1), a supply of services is considered an inter-State trade or commerce if the location of the supplier and the place of supply fall under:

a) Two different States,

b) Two different Union territories, or

c) A State and a Union territory.

This provision is subject to Section 12, which deals with place of supply of services.

Section 7(4) of the IGST Act

Imported services are treated as inter-State trade or commerce.

Section 7(5) of the IGST Act

The following scenarios are also considered inter-State trade or commerce:

a) When the supplier is located in India, and the place of supply is outside India,

b) When the supply is made to or by a Special Economic Zone (SEZ) developer or an SEZ unit, and

c) In the taxable territory, when the supply is not an intra-State supply and not covered elsewhere in this section.

This section is crucial for understanding the tax implications in cases of inter-State supply, as IGST is applicable to such supplies.

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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.