III
IGST Act · Chapter III
Levy and Collection of Tax
2 sections authoredIGST Act, 2017
Sections in this chapter
- 5
Levy and collection
(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…
- 6
Power to grant exemption from tax
(1) Where the Government is satisfied that it is necessary in the public interest so to do, it may, on the recommendations of the Council, by notification, exempt generally, either absolutely or subject to such conditions as may be…
BHARAT TAX
Treatise on the Integrated Goods and Services Tax Act, 2017
CGST · IGST · UTGST · DGST · Rules thereunder
INTEGRATED GOODS AND SERVICES TAX ACT, 2017
Chapter III — LEVY AND COLLECTION OF TAX (Sections 5-6)
Chapter Index — fourteen-section practitioner architecture
Effective from 1 July 2017 (IGST Act, 2017) | First Edition | May 2026
[The IGST charging section + exemption power — substantive heart of the inter-State GST regime]
1. Scope at a Glance
Chapter III of the IGST Act (ss. 5 and 6) is the substantive heart of the inter-State GST regime. Section 5 is the charging section — sub-section (1) levies IGST on inter-State supplies (with proviso for imports as duty of customs); sub-section (2) defers the charge on petroleum products; sub-section (3) creates reverse-charge mechanism for notified categories; sub-section (4) — substituted by IGST Amendment Act 2018 — creates narrower RCM for notified class receiving from unregistered suppliers; sub-section (5) creates the e-commerce operator deemed-supplier framework. Section 6 provides the exemption power — general exemption by notification, special exemption by order, and one-year Explanation insertion window. Together they define the perimeter of every IGST liability and every IGST exemption claim.
2. Section-by-Section Synopsis
SECTION
OPERATIVE SYNOPSIS
Section 5 — Levy and collection
Five sub-sections. (1) Substantive IGST charge on inter-State supplies at notified rates not exceeding 40%; proviso for IGST on imports as duty of customs collected at customs clearance. (2) Petroleum products charge deferred to Council-notified date (not yet notified). (3) RCM on notified categories — Notif 4/2017-IT(R) (goods) and 10/2017-IT(R) (services). (4) Substituted by IGST Amendment Act 2018 w.e.f. 01.02.2019 — RCM on notified class of registered persons receiving notified supplies from unregistered suppliers (primarily real-estate promoters per Notif 7/2019-CT(R)). (5) E-commerce operator deemed-supplier for notified services — Notif 17/2017-IT(R) covers radio-taxi, accommodation, housekeeping, restaurant (post 01.01.2022), with provisos for representative / appointee for non-resident ECOs.
Section 6 — Power to grant exemption from tax
Three sub-sections. (1) General exemption by notification — absolute or conditional. (2) Special exemption by order in exceptional cases (rarely used in practice). (3) Explanation insertion within one year of original notification / order, with retrospective effect "as if always part of original". Explanation: where exemption is absolute, supplier shall not collect tax in excess of effective rate.
3. Key Doctrines
DOCTRINE
SOURCE / APPLICATION
Mohit Minerals — composite supply + Council persuasive
RCM notification cannot enlarge charge beyond composite-supply scope; GST Council recommendations are persuasive not binding. (2022) 10 SCC 700.
VKC Footsteps — refund as statutory concession
Refund of accumulated ITC for inverted-duty is statutory entitlement not constitutional right; Rule 89(5) limited scope upheld. (2022) 2 SCC 603.
Safari Retreats — functionality test for plant
ITC on construction inputs for buildings used to make taxable outward supplies (rental, hotel, mall) depends on functionality test; building may qualify as 'plant' under s. 17(5)(d). (2024).
Bharti Airtel — finality of self-assessment
GST is self-assessment regime; retrospective rectification of GSTR-3B not permitted. (2022) 4 SCC 328.
Skill Lotto — legislative latitude on goods
Definition of 'goods' under GST is broad; legislative discretion in valuation. (2021) 15 SCC 667.
L&T — works contract accretion
Goods incorporated in building become buyer's property at incorporation; deemed sale. (2014) 1 SCC 708. Informs IGST POS for works-contract.
Imagic Creative — composite supply principal-supply
Service-tax and VAT mutually exclusive; principal-supply doctrine. (2008) 2 SCC 614.
AIFTP — service-tax constitutional foundation
Service-tax is value-added tax on services; constitutional anchor for GST on services. (2007) 7 SCC 527.
Dilip Kumar strict-then-liberal
Exemption notifications construed strictly at threshold (whether case falls within); liberally thereafter (extent of exemption). (2018) 9 SCC 1.
Vatika Township prospectivity
Strong presumption of prospectivity for any rate / exemption change. (2015) 1 SCC 1.
Mafatlal unjust enrichment
Refund denied where burden passed on. (1997) 5 SCC 536.
Maneka Gandhi audi alteram partem
Procedural fairness for any adverse rate / classification / exemption change.
Maximum-rate cap (40%)
Section 5(1) caps IGST rate at 40%; rates above ultra vires.
Petroleum-deferral architecture
Section 5(2) defers IGST charge on petroleum to Council-notified date (not yet notified). Pre-GST excise + VAT regime continues for these products.
4. Amendment Timeline
DATE / INSTRUMENT
CHANGE
01.07.2017 — Notification 3/2017-IT
Sections 5 and 6 brought into force as part of substantive IGST regime.
28.06.2017 — Notifications 1/2017, 4/2017, 8/2017, 9/2017, 10/2017, 12/2017, 17/2017-IT(R)
Rate schedules, RCM lists, e-commerce operator framework, exempt schedules — operative from appointed-day.
13.10.2017 — Notification 38/2017-CT (and successors)
Suspension of original s. 5(4) / s. 9(4) RCM on unregistered-supplier purchases. Kept in suspension till 31.01.2019.
29.08.2018 — IGST (Amendment) Act 2018 (Act 32 of 2018)
Substituted s. 5(4) with narrower scope — RCM only on notified class for notified supplies from unregistered suppliers. W.e.f. 01.02.2019.
29.03.2019 — Notification 7/2019-CT(R)
First operative notification under substituted s. 5(4) / s. 9(4) — RCM on real-estate promoters for specified inputs (cement etc.).
19.05.2022 — Mohit Minerals (SC)
Notifications 8/2017-IT(R) and 10/2017-IT(R) struck down to extent they imposed RCM on ocean freight component of CIF imports.
30.12.2021 — Notification 17/2021-CT(R)
Amended Notification 17/2017 to include restaurant services + cloud kitchens within ECO deemed-supplier framework. Effective 01.01.2022.
03.10.2024 — Safari Retreats (SC)
Functionality test for 'plant' in s. 17(5)(d) — building used to make taxable supplies may qualify; matter remanded.
Periodic amendments to rate notifications
Notifications 1/2017 and 8/2017 amended dozens of times since 2017 — rate rationalisation, sector-specific changes.
5. Forms — Direct or Indirect Use in Chapter III
FORM
PURPOSE / TRIGGER
Tax invoice (Rule 46 CGST Rules)
s. 5(1) charge — invoice must show POS, IGST amount, HSN/SAC.
GSTR-1 Table 5A / 7A
Inter-State outward supplies — B2B / B2C POS-wise reporting.
GSTR-3B Table 3.1(a)
Outward taxable supplies including IGST.
GSTR-3B Table 3.1(b)
Zero-rated supplies (export / SEZ) — taxable in scheme of charge but rate is NIL.
GSTR-3B Table 3.1(c)
Exempt / nil-rated supplies — under s. 6 exemption.
GSTR-3B Table 3.1(d)
Inward supplies attracting RCM under s. 5(3)/(4) — IGST payable.
GSTR-3B Table 4
ITC available including on RCM-paid.
Bill of Entry (Customs)
Import-IGST under s. 5(1) proviso — IGST particulars on BoE.
RFD-01
Refund of accumulated ITC under zero-rated / inverted; refund of IGST on exports.
LUT (Form GST RFD-11)
For zero-rated supply without IGST under s. 16.
Self-invoice (Rule 36 CGST Rules)
For RCM on unregistered-supplier purchases under s. 5(4).
6. Due-Date / Compliance-Calendar Footprint
TRIGGER
TIMELINE
IGST charge on inter-State supply
Time of supply per ss. 12-13 CGST applied via s. 20 IGST.
IGST on imports
Time of customs clearance under s. 12 Customs Act.
GSTR-3B tax payment
Monthly — 20th / 22nd / 24th depending on State.
GSTR-1 outward reporting
Monthly — 11th; or QRMP IFF — 13th.
LUT renewal
Annual — before 1 April for the new financial year.
Refund application
Within 2 years of relevant date under s. 54.
Rate-notification effective dates
Notified separately; subscribe to CBIC notifications.
Periodic rate change tracking
Multiple per year — Council meeting decisions converted to notifications.
7. Filing Frequency / Reporting Triggers
8. CBIC Circulars / Notifications Summary
INSTRUMENT
SUBJECT
Notification 1/2017-IT(R)
Goods rate schedule.
Notification 8/2017-IT(R)
Services rate schedule.
Notification 4/2017-IT(R)
RCM on specified goods.
Notification 10/2017-IT(R)
RCM on specified services.
Notification 17/2017-IT(R)
E-commerce operator deemed-supplier framework.
Notification 9/2017-IT(R)
Exempt goods schedule.
Notification 12/2017-CT(R)
Exempt services schedule (parallel for IGST).
Notification 18/2017-IT(R)
SEZ supplies exemption.
Notification 7/2019-CT(R)
Substituted s. 5(4) / s. 9(4) operative notification for real-estate.
Notification 38/2017-CT (and successors)
Suspension of original s. 5(4) RCM (operative till 31.01.2019).
Notification 17/2021-CT(R)
Restaurant + cloud kitchen added to ECO deemed-supplier framework.
Circular 76/50/2018-GST
Government services RCM clarifications.
Circular 32/06/2018-GST
Government services exemption clarifications.
Circular 51/25/2018-GST
Healthcare exemption clarifications.
Circular 130/49/2019-GST
Restaurant-through-ECO clarifications (pre-2021 framework).
IGST (Amendment) Act 2018 (Act 32 of 2018)
Substitution of s. 5(4) w.e.f. 01.02.2019.
9. Sectoral Pointers — Chapter III Application
SECTOR
POINTERS
Manufacturing — inter-State supplies
s. 5(1) charge; rate per Notif 1/2017-IT(R) HSN-wise. Composite-supply rate per principal-supply test.
Services — inter-State
s. 5(1) charge; rate per Notif 8/2017-IT(R) SAC-wise. RCM under Notif 10/2017 for GTA, legal, sponsorship, govt services.
Importers
s. 5(1) proviso + s. 3(7) Customs Tariff Act; CIF + BCD = IGST base. Mohit Minerals — no separate IGST on ocean freight.
Exporters
Zero-rated under s. 16; LUT or IGST-paid + refund. Refund under Rule 89/96.
SEZ developers / units
Exemption under Notif 18/2017-IT(R); or zero-rated under s. 16 via LUT / IGST-paid.
Real-estate promoters
Substituted s. 5(4) RCM under Notif 7/2019-CT(R) for cement, capital goods, > 80% input threshold.
E-commerce operators
s. 5(5) deemed-supplier — Uber/Ola (taxi), accommodation aggregators, restaurant aggregators (post 01.01.2022).
Healthcare / education
Exempt under Notif 12/2017-CT(R); ITC reversal under Rule 42/43 for common inputs.
Government suppliers
RCM on most Government services under Notif 10/2017 + Circular 32/2018; specified exclusions.
GTA
Choice of 5% (RCM) or 12% (forward charge with full ITC); recipient under RCM under Notif 10/2017.
Petroleum / alcohol
s. 5(2) deferred for petroleum; alcohol outside GST entirely (Constitution Schedule). Pre-GST regime continues.
10. Practitioner Quick-Reference
SITUATION
QUICK ANSWER / SECTION
Maximum IGST rate?
40% per s. 5(1); rates above ultra vires.
IGST on imports — who collects?
Customs officer at customs clearance under s. 5(1) proviso + s. 3(7) Customs Tariff Act.
Post Mohit Minerals — IGST on ocean freight?
NO separate IGST under s. 5(3)/(4); already in CIF + BCD value base.
What does substituted s. 5(4) cover?
Notified class (currently real-estate promoters under Notif 7/2019) receiving notified supplies from unregistered suppliers.
Who pays tax under s. 5(5) for Uber / Ola?
E-commerce operator (Uber / Ola) as deemed supplier under Notif 17/2017-IT(R).
Tax on restaurant through Zomato post-01.01.2022?
Zomato pays IGST as deemed supplier at 5% (without ITC); restaurant does not charge separate tax.
Petroleum IGST?
Deferred under s. 5(2); not yet notified. Pre-GST excise + VAT continues.
Absolute exemption + collection?
Barred by Explanation to s. 6 — supplier shall not collect tax in excess of effective rate.
Conditional exemption — recipient deviates?
Strict-then-liberal Dilip Kumar; recipient diversion may invite recovery from recipient; supplier compliance at time of supply protects.
11. Cross-Chapter Coordination
12. File-Link Navigation — Chapter III Files
FILE
COVERAGE
00 - Chapter III Index.docx (this file)
Chapter-level practitioner index.
Section 5 - Levy and collection.docx
s. 5 — IGST charging section; sub-sections (1)-(5); RCM architecture; e-commerce framework; imports as customs duty; Mohit Minerals doctrinal anchor.
Section 6 - Power to grant exemption from tax.docx
s. 6 — exemption power; general / special / Explanation insertion; absolute vs conditional; Dilip Kumar strict-then-liberal rule.
13. External Constitutional and Statutory Anchors
14. Key Takeaways