The exporting State will transfer to the Centre the credit of SGST used in payment of IGST. This way the exporting state will not get any revenue from tax.
The Centre will transfer to the importing State the credit of IGST used in payment of SGST. This way the importerâ€™s state will get the full amount of SGST.
This way any tax earned by exporting state in such goods in transferred to the importing state. And the net result is that the Centre government got his share and importerâ€™s state gets his.
Goods sold by a manufacturer (A) to a trader (B) in same state i.e Maharashtra for Rs. 100. Now the goods are sold by B to a trader in Gujarat (C) for Rs. 175 and finally sold by C to the consumer(D). Assuming CGST @ 9% and SGST @ 9%.
Amount Received as TAX by
|Link||Sale Price||Maharashtra||Gujrat||Central||Invoice Amount|
|A to B||Rs. 100/-||100*9% = Rs. 9/-||0||100*9% = Rs. 9/-||100+18 = 118/-|
|B to C||Rs. 175/-||0||0||175*18% = Rs. 31.5
Less: CGST & SGST Credit of Rs. 9/ each
Payment: 31.5-18 = 13.5/-
|175+31.5 = 206.5/-|
|C to D||Rs. 300||0||300*9% = 27/-
Less IGST Credit of 4.5
Payment: 27-4.5= 22.5/-
|300*9% = 27/-
Less IGST Credit of 27/-*
|300+54 = 354/-|