Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 3-8-2016 – Chapter VII of the model IGST law under section 10 contains provisions for apportionment of tax collected under the IGST Act and how settlement of funds shall be done. The provisions shall also apply to apportionment of interest and penalties realized in connection with the tax being apportioned. The amounts paid in respect to IGST to Central Government can be apportioned to Central Government or the State Government(s). The rules in relation to the manner and time of apportionment, transfer or settlement shall be prescribed by the Central Government after enactment. Apportionment of tax collected According to sub-section (1), out of the IGST paid to the Central Government in respect of inter-State supply of goods and/or services to an unregistered person or to a taxable person paying tax under section 8 of the CGST Act, the amount of tax calculated at the rate equivalent to the CGST on similar intra-state su
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overnment. In case of inter-state supply of goods or services made to a registered person – who is not eligible for input tax credit, or where he does not avail credit within stipulated period i.e. remains in IGST account even after expiry of due date of filing annual return for the year in which supply was made, amount shall be apportioned to Central Government. The amount to be apportioned shall be tax @ equivalent to CGST on similar intra-state supply of goods / services. According to sub-section (3), out of the IGST paid to the Central Government in respect of import of goods and / or services by an unregistered person or by a taxable person paying tax under section 8 of the CGST Act, the amount of tax calculated at the rate equivalent to the CGST on similar intra-state supply shall be apportioned to the Central Government. IGST is payable on importation of goods and services. In case of import of goods / services by any unregistered person or import by taxable person who pays tax
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l such credit within the stipulated period i.e. and thus remains in the IGST account even after the due date for filing annual return for the year in which such supply is made. In such cases, amount shall be apportioned to Central Government which shall be the amount of tax @ equivalent to CGST payable on similar intra-state supply. According to sub-section (5), the balance amount of tax remaining in the IGST account in respect of the supply for which an apportionment to the Central Government has been done under sub-section (1), (2) or (3) shall be apportioned, in the manner and time as may be prescribed, to the State where such supply takes place as per section 5 or 6. Once the apportionment is made in terms of provisions of section 10 as above, balance amount of tax, if any shall be apportioned to the state of supply, i.e., the state in which supply of goods / services takes place as provided in section (5) or (6) of the IGST Act. Thus, states will have a second preference in apport
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