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CGST, SGST, IGST and UGST – Meaning, Apportionment and Method of Payment

Unlike the VAT regime, GST is a destination-based tax. It means that it will be paid in the state where the end user or the consumer buys the goods or services.

Since India is a federal country, where both central and state governments are empowered to earn revenue by collecting taxes, GST is further sub-divided into few types.

What are the different types of GST?

GST has been further sub-divided into four taxes –

  1. CGST – Central Goods & Services Tax
  2. SGST – State Goods & Services Tax
  3. IGST – Integrated Goods & Services Tax
  4. UGST – Union Territory Goods & Services Tax

How are these taxes applicable to any transaction?

What kind of GST will be applicable on a taxable transaction is determined by whether it is an intrastate or interstate transaction.

In an intra-state supply, where the location of the supplier and the place of supply are in the same state, CGST and SGST will be charged by the supplier. CGST will be paid to the Central Government while SGST will be paid to the State Government.

Total GST rate (sum of CGST and SGST rate) can’t be more than 28% in any case.

In an inter-state supply, where the location of the supplier and the place of supply are in the different states, IGST will be applicable. It will be paid directly to the central government.

What is CGST?

CGST is collected and levied by the Central Government. It has replaced the previous central taxes like excise duty, CST, export duty, SAD etc.CGST rate would be the same as the SGST rate.

What is SGST?

SGST is collected and levied by the respective State Government. It has replaced the previous state taxes like VAT, Entry Tax, Luxury Tax, Cesses and Surcharges on any transaction involving goods or services.

What is IGST?

Central Government collects IGST,but both Central Government and respective State Government levies it. Central Government, post-collection of tax, will distribute a share (predefined according to the agreement between Central and State Government) to the respective state. IGST rate will be equal to the sum of CGST and SGST rate.

What is UGST?

UGST is levied by the respective Union Territory on the transactions happening in any union territory of India, including Andaman and Nicobar Islands, Dadra and Nagar Haveli, Chandigarh, Lakshadweep and Daman and Diu. This tax is identical to SGST in apportionment and payment rules.

How will the input tax be apportioned?

 CGSTSGSTIGSTUGST
CGST1st-2nd-
SGST-1st2nd-
IGST2nd3rd1st3rd
UGST---1st

Input Tax (tax paid to the supplier on the purchase of goods or services) will be available for set off as follows –

  1. CGST Input Tax – CGST input tax will be set off against CGST output tax, and if any balance remains, it will be set off against IGST output tax. CGST input tax can’t be set off against SGST or UGST output tax.
  2. SGST Input Tax – SGST input tax will be set off against SGST output tax, and the remaining balance will be set off against IGST output tax.
  3. IGST Input Tax – IGST input tax will be set off against IGST output tax, followed by CGST output tax. The remaining balance will be set off against SGST or UGST output tax.

Thus, GST promotes “one nation, one tax” since it subsumes all the previous state and central indirect tax laws and allows a seamless flow of credit.

Still confused with the GST provisions or determination of the type of transaction? Reach us today, and we will be happy to assist.