Tag GST RATE

Goods and Services Tax (GST) is a form of indirect tax levied on the supply of goods and services in India. This multi-stage tax is at every stage of the supply chain, with the advantage of Input Tax Credit (ITC) at every stage. The current structure is transparent and uniform in taxation across states and avoids the cascading effect of taxes.

The central aim of GST is to support the concept of “One Nation, One Tax” through simplification and streamlining of India’s indirect taxation system.

Central Goods and Services Tax (CGST)

Central Goods and Services Tax (CGST) is imposed by the central government through the CGST Act, 2017. It is payable on all intrastate supplies of goods and services—i.e., where both the supplier and recipient are within the same state or union territory.

CGST is levied with SGST or UTGST on the very same taxable supply. The overall GST rate is divided evenly between the State and the Centre. For instance, if a commodity is taxed at 18%, then 9% is CGST and 9% is SGST. The CGST amount goes into the account of the central government and is utilised for national-level spending such as infrastructure, defence, and centrally sponsored schemes.

The central government allows input tax credits of CGST on acquisitions, which can be utilised to offset CGST or IGST liability but not SGST.

State Goods and Services Tax (SGST)

State Goods and Services Tax (SGST) is charged by the state governments under their respective SGST Acts, which have been enacted in line with the central GST structure. SGST is also charged in intra-state transactions and is levied by the state on which consumption takes place.

The state government involved receives the revenue from SGST. Similar to CGST, the SGST share of a transaction typically accounts for 50% of the overall GST. These revenues are utilised to fund state-level development like education, healthcare, infrastructure, and welfare schemes.

SGST paid as input tax can be utilised to set off SGST or IGST (in certain situations), but not CGST, which assists in keeping the revenues of states and the centre free from mutual dependence.

Illustration: A restaurant business in West Bengal offers services amounting to ₹10,000. If GST is 18%, ₹900 is CGST and ₹900 is SGST.

Union Territory Goods and Services Tax (UTGST)

Union Territory Goods and Services Tax (UTGST) is charged on intra-state supplies made within Union Territories (UTs) that lack legislatures. It is administered under the UTGST Act, 2017, and is payable in the following UTs:

• Andaman and Nicobar Islands
• Lakshadweep
• Chandigarh
• Dadra and Nagar Haveli and Daman and Diu
• Ladakh

In such regions, UTGST substitutes for SGST and is charged together with CGST. Both might be collected by the central government, but UTGST is separately credited to an account from CGST.

Similar to what occurs in SGST, the total GST is divided equally—e.g., CGST 9% and UTGST 9% for an 18% GST rate.

Note: UTs having their own legislature, i.e., Delhi, Jammu & Kashmir, and Puducherry, are not covered under UTGST. In such cases, SGST is charged in lieu.

Integrated Goods and Services Tax (IGST)

Integrated Goods and Services Tax (IGST) is charged by the Central Government under the IGST Act, 2017, and is levied on:

• Inter-state transactions (from one state or UT to another state or UT)
• Import of goods or services into India
• Export of Indian goods or services
• Supply to or by Special Economic Zones (SEZs)

IGST replaces the previous Central Sales Tax (CST) and follows a destination-based taxation system. That is, tax is levied and paid in the state where the goods or services are consumed, rather than where they are manufactured.

In interstate transactions, the seller levies IGST, which is paid to the central government. The Centre then remits the due share to the destination state where the services or goods are ultimately consumed.

Illustration:

A supplier in Maharashtra supplies goods to a customer in Haryana for ₹1,00,000 at 18% GST. The supplier collects ₹18,000 as IGST and remits the same to the Centre. The Centre subsequently adjusts Haryana’s share accordingly.

Yet another advantage of IGST is the cross-utilisation of the credit of input tax. IGST credit may be utilised to discharge IGST, CGST, or SGST, hence being extremely flexible and important for the free flow of credit and to avoid tax cascading.