What Are The Different Types Of GST In India?

Understanding the Types of Goods and Services Tax (GST) in India

1. CGST (Central Goods and Services Tax):

Levied by: The Central Government.

Applicable on: Intra-state (within the same state) supply of goods and services.

Purpose: To collect revenue for the central government.

Example: If a product is sold within Karnataka, both CGST and SGST will be levied.

2. SGST (State Goods and Services Tax):

Levied by: The State Government.

Applicable on: Intra-state (within the same state) supply of goods and services.

Purpose: To collect revenue for the state government.

Example: In the same transaction within Karnataka, SGST will be levied along with CGST.

3. IGST (Integrated Goods and Services Tax):

Levied by: The Central Government.

Applicable on: Inter-state (between different states) supply of goods and services and on imports and exports.

Purpose: To ensure a seamless flow of tax credits across states and to avoid the cascading effect of taxes.

Example: If a product is sold from Karnataka to Tamil Nadu, IGST will be levied.

4. UTGST (Union Territory Goods and Services Tax):

Levied by: The Union Territory Government.

Applicable on: Intra-UT (within the same Union Territory) supply of goods and services.

Purpose: Similar to SGST, but applicable in Union Territories.

Example: If a product is sold within a Union Territory like Chandigarh, both CGST and UTGST will be levied.

Explanation of How These Taxes Work Together:

Intra-state Transactions:

For transactions within a state, both CGST and SGST are levied. 

The tax collected is shared between the central and state governments. 

For example, if the GST rate is 18%, 9% will go to the central government (CGST) and 9% to the state government (SGST).

Inter-state Transactions:

For transactions between states, IGST is levied. 

The revenue from IGST is divided between the central and state governments based on a predetermined formula. 

For instance, if the GST rate is 18%, the entire 18% is charged as IGST, and then the central government transfers the respective share to the state where the goods or services are consumed.