Types of GST in India – CGST, SGST, IGST, and UTGST

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When you buy products or avail of services that fall under the GST Registration, the supplier or the person providing the service will charge and collect both the CGST and SGST, and IGST. The central government will collect the GST on all goods and services except a few exempt items. The GST is charged on the price of the products that include CGST and SGST. In this article, we will discuss Types of GST in India – CGST, SGST, IGST, and UTGST.

There are 4 types of GST in India

  1. SGST (State Goods and Services Tax)
  2. CGST (Central Goods and Services Tax)
  3. IGST (Integrated Goods and Services Tax)
  4. UTGST (Union Territory Goods and Service Tax)

What is meant by SGST (State Goods and Services Tax)?

The SGST tax is chargeable on the supply of goods and services made within a state.  The SGST would take taxes such as VAT, luxury tax, service tax, central sales tax, entertainment tax, entry tax, etc.

What is meant by CGST (Central Goods and Services Tax)?

Central Goods and Services Tax (CGST) is one of the tax rates applicable under a comprehensive tax system called Goods and Service Tax (GST). This levy is similar to VAT since it also applies to transferring goods from a seller to a buyer. However, CGST is a single tax structure that has replaced all the other local taxes and levies. It aims to be non-discriminatory, comprehensive, transparent, neutral, and easy to administer.

Accordingly, when the States and Centre fix the tax rate on mutual agreement, they will have to ensure that the combined rate doesn’t exceed 14 percent. It is unclear at this point as to how the three different products covered by exemptions will now form part of CGST and SGST, but it’s evident that some significant tweaking has taken place in the final legislation.

What is meant by IGST (Integrated Goods and Services Tax)?

A single tax, thus, eliminates the problem of charging one tax on similar goods in different states, leading to a cascading effect and is available at the point of sale. IGST is levied only on inter-state sales through the e-way bill linking it with GST at both state and Centre. It is collected by the government and passed on to the respective state governments.

IGST provides relief to taxpayers by decreasing the inter-state transaction cost for every Indian. The goods and services are taxed based on destination.

What is meant by UTGST(Union Territory Goods and Service Tax)?

The Union Territory Goods & Services Tax (UTGST) is the Value Added Tax/Sales tax applicable on the supply of goods and services that takes place in any of the five territories of India, viz., Andaman and Nicobar Islands, Dadra and Nagar Haveli, Chandigarh, Lakshadweep, and Daman, and Diu is known as Union Territories.

Under the old VAT, service tax was applied as additional taxation on a few services and some goods such as petroleum products, etc. But in UTGST practice, both services and goods have been taxed equally, which is a good reform in our perspective.

The integrated nature of GST Registration is not expected to impact the growth of the cities and towns as it applies to every transaction, regardless of size or kind. Despite having differences, it was seen that GST has been beneficial for economies to boost revenue growth. The tax structure under GST is more robust and straightforward.

An Overview of GST- Benefits & Important Components

If you want any other guidance related to GST Registration or GST Return Filing please feel free to talk to our business advisors at 8881-069-069.

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