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Demystifying UTGST

The full form of the UTGST is Union Territory Goods and Service Tax. UTGST is only applicable when any goods or services or both are consumed in the given five regions of India that includes Andaman and Nicobar Islands, Dadra & Nagar Haveli, Chandigarh, Lakshadweep, and Daman & Diu called as Union territories of India.

Union Territory GST will be charged along with the Central Goods and Services Tax (CGST).

What is UTGST?

The explanation for UTGST applicability in GST is that the State Goods and Services Tax (SGST) can’t be levied in a Union Territory without governing body.s

To address this issue, GST Council has chosen to have Union Territory Goods and Services Tax Law (UTGST) which would be similar to SGST. Be that as it may, SGST can be applied in Union Territories, for example, New Delhi and Puducherry, since both have their individual governing bodies, and can be considered as States according to the GST process.

List of Union Territories for the Applicability of UTGST

UTGST applies to just those union territories where there is a separate governing body. Here is the list of Union Territories where UTGST is applicable:

(i) Chandigarh

(ii) Lakshadweep

(iii) Daman & Diu

(iv) Dadra & Nagar Haveli

(v) Andaman & Nicobar islands

UTGST Applicability

Output Tax liability of the taxable person that needs to be paid by him as per the UTGST Act can be easily understood as follows:

Supply Type Output tax Liability Section Applicable
Supplies within a Union Territory without governing body UTGST and CGST (with in the UT border) Section 8(1) and 8(2) of the IGST Act
Supplies between two Union Territories without governing body Integrated GST (Between two or more UT) Section 7(1) and 7(3) of the IGST Act
Supplies between a Union Territory without governing and a State or UT with the governing body Integrated GST Section 7(1) and 7(3) of the IGST Act

Since tax paid on reverse charge basis is out of the extent of the output tax, the recipient of goods or service or both provided under reverse charge can’t avail Input Tax Credit (ITC). In this manner, the recipient is required to pay tax on a reverse charge through his e-Cash ledger and not e-Credit ledger by issuing a cheque or depositing cash towards the equivalent.

UTGST Rates

Union Territory Goods and Services Tax has the same rates as of State Goods and Services Tax. So, the UTGST rate are 0%, 5%, 12%, 18% and 28% respectively. Moreover, the exemption criteria for goods and services is also similar to SGST.

UTGST Example

Let us see how the different components under GST work in India. Assuming GST rate applicable to the product be 18%.

Sales From Sales To Amount of Sale Type of Tax GST Amount
Maharashtra Maharashtra 1,00,000 INR CGST+SGST

(9,000+9,000)

18,000 INR
Maharashtra Punjab 1,00,000 INR IGST 18,000 INR
Daman & Diu Daman & Diu 1,00,000 INR CGST+UTGST

(9,000+9,000)

18,000 INR
Daman & Diu Maharashtra 1,00,000 INR IGST 18,000 INR
Maharashtra Chandigarh 1,00,000 INR IGST 18,000 INR