Inter-State supply
IGST s.7, IGST Act
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In one line
Defines inter-State supply: supplier and place of supply in two different States or Union territories, or a State and a UT. Imports until they cross the customs frontier, supplies to or by an SEZ, exports, and any supply not covered as intra-State are all inter-State – which means IGST, not CGST plus SGST.
What this means in practice
The parts that actually decide cases — the things a practitioner checks first.
A supply to an SEZ unit or developer is inter-State even if both parties are in the same State – so IGST applies and the supply is zero-rated only for AUTHORISED OPERATIONS.
Goods imported until they cross the customs frontier remain inter-State, which is what makes a high-seas sale a Schedule III non-supply rather than an intra-State one.
The residual limb – any supply not treated as intra-State – is what catches supplies to unregistered persons where the place of supply falls in another State.
The exact words of the law
1,448 characters, uneditedReproduced from the CBIC text. We explain it above — but you should always be able to read it yourself.
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(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.
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Where this comes from
Text reproduced from the Central Board of Indirect Taxes and Customs, as available on 2026-09-05. The explanation and practice notes above are GSTZone’s own, written for this hub. If you spot anything out of date, tell us and we’ll fix it — this hub is checked daily against CBIC.
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