Chapter VIII - Apportionment of tax and settlement of funds
Section 19
Section 19: Tax paid under the wrong supply category
Section 19 handles a later change in whether a supply is inter-State or intra-State. It provides a refund route for IGST paid on a supply later held intra-State and removes interest on IGST payable when a supply first treated as intra-State is later held inter-State.
On this page
Need advice on Section 19?
This article is for general information. Refer to the Integrated Goods and Services Tax Act, 2017 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(1) A registered person who has paid integrated tax on a supply considered by him to be an inter-State supply, but which is subsequently held to be an intra-State supply, shall be granted refund of the amount of integrated tax so paid in such manner and subject to such conditions as may be prescribed.
(2) A registered person who has paid central tax and State tax or Union territory tax, as the case may be, on a transaction considered by him to be an intra-State supply, but which is subsequently held to be an inter-State supply, shall not be required to pay any interest on the amount of integrated tax payable.
Introduction
A place-of-supply or supplier-location error can change the tax head even if the underlying transaction remains taxable. Section 19 describes two directions of reclassification; the corrected tax, original payment and refund or interest consequence must be tracked separately.
Key takeaways
IGST paid, later intra-State
A registered person who paid IGST treating a supply as inter-State is entitled to a refund of that IGST if the supply is subsequently held intra-State, subject to the prescribed manner and conditions.
CGST plus State/UT tax paid, later inter-State
Where the registered person paid central and State or Union territory tax treating the supply as intra-State, but it is subsequently held inter-State, Section 19(2) removes interest on the IGST payable.
Keep the two tax legs distinct
The provision addresses refund or interest relief; it does not say the correctly classified tax need not be paid. Reconcile the tax-head correction and supporting records.
When IGST was paid on an intra-State supply
Subsection (1) applies when a registered person paid IGST on a transaction considered inter-State and the supply is subsequently held intra-State. The IGST amount is refundable in the prescribed manner and subject to the prescribed conditions.
Recompute the tax under the correct intra-State heads, and preserve the original IGST payment and the basis of the later classification.
When CGST and State/UT tax were paid on an inter-State supply
Subsection (2) applies in the reverse direction: central plus State or Union territory tax was paid on a transaction considered intra-State, then it is subsequently held inter-State. The registered person is not required to pay interest on the IGST payable under this subsection.
The interest relief does not erase the IGST principal. The refund of the wrongly paid central and State/UT taxes is addressed under the corresponding GST provisions and procedures.
Records and procedure
Document the initial and corrected place-of-supply analysis, tax invoices, returns, challans and the event by which the supply was subsequently held in the other category. Apply the current prescribed refund process and time limits to the relevant tax head.
Section 19 should not be used merely to reclassify an unrelated payment error without establishing that the supply's inter-State or intra-State character changed.
Practical checklist
Do
- Identify whether the correction moves inter-State to intra-State or the reverse.
- Retain the original tax payment and the later classification determination.
- Account separately for correctly payable tax, wrongly paid tax refund and the statutory interest relief.
- Use the current refund rules and matching CGST/State/UTGST provision for the other tax head.
Frequently asked questions
If IGST was paid but the supply is later held intra-State, is IGST refundable?
Section 19(1) provides a refund of IGST paid by the registered person, in the prescribed manner and subject to conditions.
Does Section 19(2) waive IGST itself?
No. It removes interest on IGST payable where a supply first taxed as intra-State is later held inter-State.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026