by GST is a destination-based tax applicable on all transactions involving supply of goods and services for a consideration subject to exceptions thereof. GST in India comprises of Central Goods and Services Tax (CGST); levied and collected by Central Government, State Goods and Services Tax (SGST); levied and collected by State Governments/Union Territories with State Legislatures and Union Territory Goods and Services Tax (UTGST); levied and collected by Union Territories without State Legislatures, on intra-State supplies of taxable goods and/or services.
Inter-State supplies of taxable goods and/or services are subject to Integrated Goods and Services Tax (IGST). IGST is approximately the sum total of CGST and SGST/UTGST and is levied by Centre on all inter-State supplies.
CGST
Central Goods and Services Tax or CGST is the indirect tax levied by the Central Government. It is levied on the transaction of goods and services which are undertaken within the state i.e. intrastate. The tax collected under the head “CGST” is payable to the central government treasury.
The CGST is charged to compensate the central government for previously existed indirect taxes such as:
- Central Excise Duty
- Service Tax
- Duties of Custom
- Surcharges
- Cesses etc.
The CGST is charged along with SGST or UTGST and at the same rates. This is done as per the Dual GST model followed in India, where both central and state governments have their separate taxation legislatures.
IGST
Under GST, IGST is a tax levied on all Inter-State supplies of goods and/or services and will be governed by the IGST Act. IGST will be applicable on any supply of goods and/or services in both cases of import into India and export from India.
IGST is levied on all interstate supply of goods and services by the Central Government. Unlike, CGST, SGST, & UTGST which are levied upon the supply of goods or services within a state.
IGST has provided a standardization to taxation on the supply of goods and services made outside the state. This applies both on a supply made outside the state and those made outside the country.
The rate of IGST would always be approximately equal to the CGST rate plus SGST rate.
SGST
Under GST, SGST is a tax levied on Intra State supplies of both goods and services by the State Government and will be governed by the SGST Act. As explained above, CGST will also be levied on the same Intra State supply but will be governed by the Central Government.
SGST is charged along with and at the equal rates that of CGST on a good or service. This tax is charged by all the states of India but has also been adopted by two union territories of
- Puducherry
- Delhi
Because both of these union territories have their own legislative assembly and council.
UTGST
Similar to how SGST is levied by the state governments on the intra-state supply of goods and services, Union Territory Goods and Services Tax or UTGST is levied by the Union Territory governments. It refers to the tax levied on the intra-Union Territory supply of goods and services. It is governed by the UTGST Act and is levied along with CGST.
UTGST is similar to SGST and is levied in Union Territories which do not have their own legislature. UTGST is applicable on the supplies that take place in the Union Territories of Andaman and Nicobar Islands, Chandigarh, Dadra and Nagar Haveli, Daman and Diu, and Lakshadweep. Please note that the Union Territories of Delhi and Puducherry will fall under SGST law as they have their own legislature.
The order of ITC utilisation of UTGST is similar to SGST. ITC of UTGST should first be set off against UTGST. Any balance remaining may be used to set off any IGST liability.
