The term Integrated most prominently refers to the Integrated Goods and Services Tax (IGST), which is a key provision and concept within India's indirect tax structure. It was implemented on July 1, 2017, as a component of the Goods and Services Tax (GST) reform, which was introduced to simplify the tax code and establish a common national market under the "One Nation, One Tax" idea. The IGST was created to solve the problem of complex taxation on inter-state trade, replacing the older Central Sales Tax system and eliminating the cascading effect of taxes.
The IGST is a single tax levied on the supply of goods and services between two states (inter-state transactions) and on imports. Its mechanism is based on the principle of a destination-based consumption tax: the tax is collected by the Central Government, but the revenue is later shared with the destination state where the goods or services are finally consumed. The rate of IGST for any product is equal to the combined sum of the Central GST (CGST) and State GST (SGST) rates for that product. For example, if a product has an 18% GST rate, the IGST charged on an inter-state sale is the full 18%. This structure ensures that the total tax burden remains identical to local transactions, while maintaining the integrity of the Input Tax Credit (ITC) chain across state borders. The IGST is governed by the Integrated Goods and Services Tax Act, 2017, and is intrinsically connected to the CGST and SGST components of the overall GST framework. Since its introduction, the fundamental mechanism of IGST as the tax on inter-state supply has remained the same, though the overall GST framework sees periodic rate and rule amendments.