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What are the different types of GST in India (CGST, SGST, IGST, UTGST)?

What are the different types of GST in India (CGST, SGST, IGST, UTGST)?

07-Dec-2024

GST

Answer By law4u team

In India, the Goods and Services Tax (GST) is a unified indirect tax system with four components to facilitate tax collection across the country. These are CGST, SGST, IGST, and UTGST. Each has a specific purpose based on the nature of transactions. CGST (Central Goods and Services Tax): Levied by the Central Government on intra-state supplies of goods and services (within the same state). The revenue collected is shared with the Central Government. Example: If goods are sold in Maharashtra and consumed in Maharashtra, CGST is applicable. SGST (State Goods and Services Tax): Levied by the State Government on intra-state supplies of goods and services. The revenue is shared with the State Government where the supply takes place. Example: In the same intra-state transaction in Maharashtra, SGST is collected alongside CGST. IGST (Integrated Goods and Services Tax): Levied by the Central Government on inter-state supplies of goods and services (between two states or union territories) and imports/exports. The tax collected is apportioned between the Centre and the destination state/union territory where the goods or services are consumed. Example: If goods are sold from Maharashtra to Gujarat, IGST is charged instead of CGST and SGST. UTGST (Union Territory Goods and Services Tax): Levied by the Union Territory Government on intra-union territory supplies of goods and services. Applicable in Union Territories without their own legislature, such as Andaman and Nicobar Islands, Lakshadweep, and Dadra and Nagar Haveli. UTGST is charged alongside CGST, similar to the CGST-SGST structure. Key points to note: Intra-state transactions: CGST + SGST/UTGST are levied. Inter-state transactions: IGST is levied. This structure ensures seamless tax collection and compliance across the country while avoiding cascading taxes.

Answer By Ayantika Mondal

Dear Client, In India, the Goods and Services Tax is an integrated system of indirect taxation, integrating multiple taxes into a single structure. It has four different categories that have been designed to address particular objectives dependent on the type of transaction involved. The categories are important for compliance and efficient tax administration. Types of GST in India 1. Central Goods and Services Tax (CGST): • Definition: Centralized CGST charged by the Central Government on in-state transactions of goods and services. • Applicability: It is applicable when the supply of goods or services takes place within a single state. All the revenue collected under CGST is retained by the central government. • Example: The CGST and SGST will be charged if the transaction takes place in Maharashtra. 2. State Goods and Services Tax (SGST): • Definition: SGST is levied by individual state governments on intrastate transactions. • Similar to CGST, it is applicable when it is an inter-state transaction because the money received accrues to the state government. • Example: In a sale of goods within Gujarat, SGST would be collected alongside CGST. 3. Integrated Goods and Services Tax (IGST): • Definition: IGST is applicable for inter-state transactions and is levied by the Central Government. • Applicability: It facilitates seamless movement of goods across state borders. The revenue collected under IGST is shared between the central and state governments based on the destination of the goods. • Example: If goods are sold from Maharashtra to Tamil Nadu, IGST will be applicable. 4. Union Territory Goods and Services Tax (UTGST): • Definition: UTGST is similar to SGST but applies specifically in Union Territories that do not have a legislative assembly. • Applicability: It is used for intra-Union Territory transactions, where both CGST and UTGST are levied. • Example: In transactions occurring in Chandigarh, both CGST and UTGST would apply. Transaction Types • Intra-State Transactions: These involve sales within the same state, where both CGST and SGST are applied. • Inter-State Transactions: These occur between different states, where IGST is applied. Conclusion The introduction of GST has streamlined the taxation process in India by replacing multiple indirect taxes with a unified system. Each type of GST serves a distinct purpose, ensuring that tax collection is efficient while promoting economic integration across states. Understanding these types is essential for businesses to comply with tax regulations effectively. Hope this answer helps you.

Answer By Anik

Dear Client, Goods and Services Tax has been structured under the Indian taxation system as a dual system where both the Central and the State Governments are authorized to levy and collect taxes from the supply of goods and services. The system is ruled by the Central Goods and Services Tax Act, 2017 and corresponding state legislations. GST is divided into the following types, categorized based on the nature of transactions: 1. Integrated Goods and Services Tax (IGST): • Authorities: The Central government levies and collects. Scope : Applicable on intra-state supplies, or, in other words, supplies of goods and services within the same state or union territory. • Purpose: The amount derived under CGST goes to the Central Government. • Example: In case he sells his goods in Delhi, then CGST as well as SGST both will be applicable against the GST rate. 2. State Goods and Services Tax: • Authority: Levied and recovered by the concerned State Government. • Scope: Applicable on intra-state supplies, like CGST. • Purpose: The revenue collected under SGST is retained by the state where the transaction takes place. For example, in Karnataka, for a sale, the GST rate is divided equally between CGST-the amount to the center and SGST-the amount to the state. 3. Integrated Goods and Services Tax (IGST): • Authority: Levied and collected by the Central Government. • Scope: Applicable on inter-state supplies, i.e., transactions where the supplier and recipient are in different states or union territories. It also applies to imports and exports. • Distribution of Revenue: The Central Government collects IGST and subsequently distributes the revenue between the originating state and the destination state, as per statutory provisions. • Example: If goods are supplied from Maharashtra to Tamil Nadu, IGST is levied, and the revenue is apportioned accordingly. 4. Union Territory Goods and Services Tax (UTGST): • Authority: Levied and collected by Union Territories with no legislature, such as Chandigarh, Lakshadweep, and Daman and Diu. • Scope: Applicable on intra-UT supplies alongside CGST, similar to how SGST is levied in states. • Purpose: The revenue generated under UTGST is retained by the respective union territory. Conclusion The classification of GST into CGST, SGST, IGST, and UTGST ensures efficient taxation and equitable revenue sharing between the center and states. This dual model promotes uniformity in the tax system while preserving the fiscal autonomy of states and union territories. By reducing the complexities of the previous indirect tax regime, GST has streamlined the taxation framework in India, fostering ease of doing business and contributing to economic growth. Hope this answer helps you.