What is CGST, SGST, IGST & UTGST ?

The topics covered under this article Framework under the Goods and Services Tax (GST)

Under the GST law, taxes can be classified into four types:

• Central Goods and Services Tax (CGST)
• State Goods and Services Tax (SGST)
• Integrated Goods and Services Tax (IGST)
• Union Territory Goods and Services Tax (UTGST)

The central government collects either CGST and SGST or only IGST, depending on whether the transaction is intra-state or inter-state, respectively.

Inter-state Supply:

This refers to the supply of goods or services where the supplier's location and the place of supply are in:

• Two different States
• Two different Union territories
• A State and a Union territory

It also includes the supply of goods or services when the supplier is in India, and the place of supply is outside India, or to/by a Special Economic Zone developer or unit, or in the taxable territory, not being an intra-state supply.

Intra-state Supply:

This pertains to the supply of goods or services where the supplier's location and the place of supply are in the same State or Union territory. However, certain supplies, such as those to or by a Special Economic Zone developer or unit, goods imported into India until they cross customs frontiers, or supplies to a tourist, are not treated as intra-state.

When IGST is applicable:

IGST, or Integrated Goods and Services Tax, is levied on all interstate supplies of goods and services. It standardizes taxation for supplies made outside the state or country. The IGST rate is typically equal to the combined rate of CGST and SGST.

When CGST is applicable:

CGST, or Central Goods and Services Tax, is levied by the Central Government on intra-state supplies of goods and services. It is charged along with SGST or UTGST at the same rates, following the Dual GST model.

When SGST is applicable:

SGST, or State Goods and Services Tax, is imposed by State Governments on intrastate sales of goods and services. It is charged along with CGST at equal rates for intra-state supplies.

What is UTGST:

UTGST, or Union Territory Goods and Services Tax, is similar to SGST. The key difference is that the tax revenue goes to the treasury of the respective union territory where the goods or services are finally consumed.

FAQs (Frequently Asked Questions)

Q. What is the full form of GST?
A. The full form of GST is Goods and Services Tax. It is an indirect tax levied on the supply or sale of certain goods and services.

Q. What are the types of GST?
A. 

• GST comprises
• CGST,
• SGST,
• UTGST and IGST.
  Occasionally, a cess may also be levied.

Q. What taxes are levied on an intra-state supply?
A. In the case of Intra State Supply, CGST and SGST are imposed on the supplies.

Q. What is the maximum rate at which IGST can be levied?
A. The maximum rate for IGST is 28%.

Q. What is the meaning of intra-state in GST?
A. According to Section-8 of the IGST Act 2017,

(1) Subject to the provisions of section 10, the supply of goods where the location of the supplier and the place of supply of goods are in the same State or same Union territory shall be treated as intra-state supply:

Provided that the following supply of goods shall not be treated as intra-State supply namely:-

• Supply of goods to or by a Special Economic Zone developer or a Special Economic Zone unit;
• Goods imported into the territory of India till they cross the customs frontiers of India; or
• Supplies made to a tourist are referred to in section 15.

(2) Subject to the provisions of section 12, the supply of services where the location of the supplier and the place of supply of services are in the same State or same Union territory shall be treated as intra-state supply:

Provided that the intra-state supply of services shall not include the supply of services to or by a Special Economic Zone developer or a Special Economic Zone unit.

Explanation 1. For this Act, where a person has,-

• An establishment in India and any other establishment outside India;
• An establishment in a State or Union territory and any other establishment outside that State or Union territory; or
• An establishment in a State or Union territory and any other establishment registered within that State or Union territory, then such establishments shall be treated as establishments of distinct persons.

Explanation 2. - A person carrying on a business through a branch or an agency or a representational office in any territory shall be treated as having an establishment in that territory.

Example: ABC Ltd. located in Indore, Madhya Pradesh supplies LED Lamps worth Rs. 1,00,000 to another entity located in Bhopal, Madhya Pradesh. The GST is charged at 18%, which is apportioned as 9% CGST and 9% SGST.

GST Calculation:

GST Amount = Invoice Value * GST Rate = Rs. 1,00,000 * 18% = Rs. 18,000/-

CGST Amount = GST Amount / 2 = Rs. 18,000 / 2 = Rs. 9,000/-

SGST Amount = GST Amount / 2 = Rs. 18,000 / 2 = Rs. 9,000/-

The dealer collects a total of Rs. 18,000 as GST from the customer. Out of this amount:

Rs. 9,000 is paid as CGST to the Central Government.

Rs. 9,000 is paid as SGST to the Madhya Pradesh State Government.

Q. What is the meaning of inter-state in GST?

A. According to Section 7 of the IGST Act 2017,
(1) Subject to the provisions of section 10, supply of goods, where the location of the supplier and the place of supply are in-

• two different States;
• two different Union territories; or
• a State and a Union territory,

shall be treated as a supply of goods in the course of inter-state trade or commerce.

(2) Supply of goods imported into the territory of India, till they cross the customs frontiers of India, shall be treated to be a supply of goods in the course of inter-state trade or commerce.

(3) Subject to the provisions of section 12, supply of services, where the location of the supplier and the place of supply are in-

• two different States;
• two different Union territories; or
• a State and a Union territory,

shall be treated as a supply of services in the course of inter-state trade or commerce.

(4) Supply of services imported into the territory of India shall be treated to be a supply of services in the course of inter-state trade or commerce.

(5) Supply of goods or services or both,-

• when the supplier is located in India and the place of supply is outside India;
• to or by a Special Economic Zone developer or a Special Economic Zone unit; or
• in the taxable territory, not being an intra-state supply and not covered elsewhere in this section,

shall be treated to be a supply of goods or services or both in the course of inter-state trade or commerce.

In Simple Words:

Interstate supply refers to a scenario in which the provider of goods or services is located in a distinct state or Union Territory, and the destination or place of receipt of those goods or services is situated in another state or Union Territory. Additionally, supplies involving activities such as imports, exports, or transactions with Special Economic Zone (SEZ) units or Export-oriented Units (EOUs) are also categorized as interstate supplies. In the context of India's taxation system, the Central Government imposes the Integrated Goods and Services Tax (IGST) on interstate supplies of goods and services, ensuring uniform taxation and revenue distribution across states and Union Territories.

For Example: A Company XYZ Ltd, located in Indore, Madhya Pradesh, supplies LED Lamps worth Rs. 1,00,000 to Mumbai, Maharashtra, this transaction is categorized as an interstate supply. This is because the supplier is in Madhya Pradesh (one state) and the place of supply is in Maharashtra (a different state).

The applicable GST rate on the goods supplied is 18%. Therefore, IGST (Integrated Goods and Services Tax) is levied on this interstate supply. Here's how the IGST calculation works:
IGST Amount = Value of Supply * GST Rate
IGST Amount = Rs. 1,00,000 * 18% = Rs. 18,000
So, in this case, the dealer, Company ABC Ltd, will charge Rs. 18,000 as IGST to the customer in Mumbai, Maharashtra. This IGST amount is then paid to the Central Government. It's important to note that IGST is a unified tax collected by the Central Government and a share of it is later distributed to the destination state, which in this case is Maharashtra. This ensures the seamless flow of goods and services across state borders while maintaining a fair revenue-sharing mechanism between states and the central government.

Q. What are the GST set-off rules?
A. GST Set-off Rules refer to allowing businesses to claim credit for their inputs.

Q. What is the difference between inter and intra-state in GST?
A.

• Intra-state supply : Transactions within the same state or union territory
• Inter-state supply : Transactions between different states, union territories

Q. What is Integrated GST (IGST)?
A. Integrated Goods and Services Tax (IGST) is levied on all interstate supplies (i.e. supplies made outside the state or country) of goods, services, or both.

Q. What does 'I' stand for in IGST?
A.'I' in IGST stands for Integrated. It means that this tax is integrated across states for transactions involving the movement of goods and services.

Q. What is the meaning of inward supply?
A. Inward supply refers to the receipt of goods or services or both by a person from the supplier, whether within the same state or from another state.

Q. What is the maximum rate of CGST?
A. The maximum rate for IGST is 14%.

Q. What is the maximum rate of SGST?
A. The maximum rate for IGST is 14%.

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