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Types of GST - CGST, SGST and IGST

August 19, 2020

Types Of GST

Types of GST

GST is a simple all-inclusive tax structure that replaces the indirect taxes and provides a rationalized structure for tax system in India. GST could eliminate the cascading effect of tax i.e. tax on tax disadvantages of the country. The types of GST include

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

What are the Components of GST?

GST has various components that contribute to its absolute GST framework, otherwise called as types of GST. The GST types are determined based on the province in which the goods and/or services are exchanged and transactions made. Based on this viewpoint, the different types of GST are:

  • Interstate GST Type: IGST collected by Central Government
  • Intrastate GST Type: SGST and UTGST collected by the State or Union Territory, CGST collected by the Central Government.

What are the Determining Factors of CGST, SGST and IGST?

The determining factors of CGST, SGST and IGST are derived from the taxable transaction that happened in intrastate and interstate supply.

  • When a supplier and buyer are located in the same state, it falls under the intrastate supply of goods and services. In this case, the seller has to collect both CGST and SGST from the buyer. CGST is to be submitted to Central Government and SGST to the State Government.
  • When the supplier and the place of supply are in different states or when import/export/supply of goods and/or services is made to or by a SEZ unit, it will be considered as interstate. Here seller has to collect IGST from buyer.

What is Central Goods & Services Tax (CGST)?

CGST is a Central Government imposed tax applied on intrastate supply of goods, services or both that falls under the CGST Act. SGST also levies tax on intrastate supply itself, only State Government will be the administering body collecting the SGST taxes. Thus State and Central governments will agree on combining the collected tax and sharing an agreed upon revenue between them. According to Section 8 of the GST Act, taxes will be levied on all intra-state supplies where the tax rate shall not exceed 14% each.

What is State Goods & Services Tax (SGST)?

Intrastate supply of goods and services draws SGST, collectable by the state government and is on par with the SGST Act. CGST will also be imposed on the same intrastate supply, but will be administered by the central government. Tax liabilities under SGST can be applied under Input Tax Credit (ITC) of SGST and IGST only.

What is Integrated Goods & Services Tax (IGST)?

All interstate supply of goods and/or services comes under the GST type called IGST which is governed by the IGST Act. Any goods and/or services imported to India or exported from India will fall under the IGST type of GST. Exports would be zero-rated under IGST and the collected IGST shall be shared between Central & State Governments.

What is the Union Territory Goods & Services Tax (UTGST)?

UTGST is collected on intrastate supplies by the Central Government and is governed by the UTGST Act, 2017. UTGST applies to intrastate supplies where the location of the supplier and place of supply are same.

SGST, CGST and IGST rates of Common Products

Input Tax Credit and GST Types

Lets Assume, goods worth Rs. 15,000 are sold by a manufacturer X from Karnataka to a Dealer Y in Karnataka. Dealer Y resells it to Trader Z in Kerala for RS.26,250. Trader Z finally sells it to the final Customer A for Rs.45,000.
Applicable tax rates for the goods sold are:-

CGST =12%
SGST = 6%
IGST =12%

For more about GST

  1. What is GST Framework?
  2. Current GST Return due dates
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