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SGST Act, 2017

full form of SGST

The full form of SGST is State Goods and Services Tax. Like CGST and IGST, SGST is also an element of GST. The State Goods and Service Tax Act 2017 looks after SGST Act.

So, with the introduction of SGST, the other indirect taxes levied by the state government in the previous taxation system got subsumed under GST. Moreover, all the tax collected under SGST remains within the hands of state governments.

Meaning of SGST

The State Goods and Service Tax Act 2017 (SGST) is a tax levied on Intra State supplies of goods and services by the State government.

Applicability of SGST Act, 2017

In order to know whether the supply of goods or services or both attracts SGST, it is essential for us to know if the supply is an intra-state or inter-state supply.

Intra-state supply is a nature of supply where the supplier’s location and the recipient are in the same state. In this class of supply, the supplier collects both CGST and SGST. The value received under CGST is deposited with the Central government, whereas the tax collected under SGST is submitted with the state government.

Features of SGST

Here are some of the significant features of SGST:

1.    SGST is levied and gathered by the states on all goods and services provided for consideration.

2.    The tax accumulated is deposited into the accounts of the particular state.

3.    Each state has its separate SGST act under its State Goods and Service Tax Department. However, the basic features of the GST law for all the states, like the charges, valuation, taxable event, measure, classification, etc., would remain the same across the respective act of each state.

Difference between CGST, SGST & IGST

Parameters CGST SGST IGST
Full-Form Central Goods and Services Tax State Goods and Services Tax Integrated Goods and Services Tax
Supply Intra-State Intra-State Inter-State
Levied by Central Government State Government Central Government
Collected by Central Government State Government Central Government
ITC Utilization (i) CGST

(ii) IGST

(i) SGST

(ii) IGST

(i) IGST

(ii) In case of any balance left,  towards CGST and SGST

Applicability of composition scheme Applicable Applicable Not Applicable
Registration Criteria A taxpayer whose aggregate turnover surpasses 40 Lakh INR (20 Lakh INR in particular states) do not need to obtain registration. A taxpayer whose aggregate turnover surpasses 40 Lakh INR (20 Lakh INR in particular states) do not need to obtain registration. Every taxpayer who is carrying out inter-state supply needs to obtain registration irrespective of the turnover prescribed.

Understanding the mechanism of GST

Here we see how the different elements under GST work in India.  Suppose the GST rate applies to the product by 18%.

Sales From

Sales To

Amount of Sale

Type of Tax

GST Amount

Collecting State

Delhi Delhi 2,00,000 INR CGST+SGST

(18,000+18,000)

36,000 INR NA
Delhi UP 2,00,000 INR IGST 36,000 INR UP
Andaman & Nicobar Andaman & Nicobar 2,00,000 INR CGST+UTGST

(18,000+18,000)

36,000 INR NA
Andaman & Nicobar Delhi 2,00,000 INR IGST 36,000 INR Delhi
UP Lakshadweep 2,00,000 INR IGST 36,000 INR Lakshadweep

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