Equipping Modern Enterprises with Powerful GST, E-Way Bill & E-Invoicing Solutions

logo image
  • GST Filing & Reconciliation
  • E-Way Bill Automation & E-Way Bill APIs
  • E-Invoicing Simplified
  • GSTIN Search
  • Expert Assistance

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

Unlike the Value Added Taxation (VAT) laws, the Goods and Service Tax (GST) is a destination-based tax. It means that it has to be collected and deposited in the state where the end-user or the consumer buys the goods or services.

India is a federal country, where both the Central and State governments are empowered to collect taxes and earn revenue.

GST is one of the most celebrated tax reforms in India. Since Independence, it has brought uniformity in the indirect taxation structure and helped in the removal of the cascading effect of the different taxes that had been levied in the past under that taxation system in different types of GST.

What are the different types of GST?

GST has been further sub-categorized into four taxes:

  • Central Goods and Services Tax(CGST)
  • SGST stands for State Goods and Services Tax(SGST)
  • Integrated Goods and Services Tax(IGST)
  • Union Territory Goods and Services Tax(UTGST) or UGST

How do these taxes apply to any transaction?

The type of Goods and Services Tax (GST) will be dependent on the taxable transaction and is determined by whether the relevant transaction in question is intrastate or interstate.

  • In an intra-state supply, where the supplier of goods or services or both and the place of supply are in the same State or Union territory, CGST and SGST/UTGST will be applicable and collected by the supplier of goods or services or both and deposited to the respective authorities. CGST would be collected by the Central Government and the SGST/ UTGST would be collected by the respective State Governments or governments of Union territories.

The various rates of GST prescribed are 0.25%, 5%, 12%, 18% and 28%. The maximum rate of GST (sum of CGST and SGST/UTGST or IGST 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 is in the different states, IGST will be applicable. In cases of import or export of the goods or services or both, when the supply of goods or services is made to or by the Special Economic Zones (SEZ) units, the transaction is considered as the Inter-State as per the GST Law.

Such IGST collected will be deposited directly to the Central government and apportioned in the manner as recommended by the GST Council.

What is CGST?

CGST is levied and collected by the Central Government. It has replaced the previously charged central taxes like Excise duty, Central Sales Tax, Export Duty, Special Additional Duty, etc.

The rate of CGST would be the same as the rate of SGST. Next, you get to know about SGST definition.

What is SGST?

SGST is collected and deposited by the respective State Government that’s what SGST means. It has replaced the previous state-level taxes like VAT, Entry Tax, Luxury Tax, Cesses, Surcharges, etc. on transactions involving goods or services.

What is IGST?

The Central Government collects IGST, but both the Central Government and respective State governments levy it. The Central Government, after collection of the tax, will distribute the share, that was predefined as per the agreement with the Central and State Governments of the respective state. The IGST rate will be computed as the sum of CGST and SGST rates. Next you will know ugst meaning

What is UGST?

The UGST full form or UTGST full form is Union Territory Goods and Services Tax (UTGST) is levied by the respective Union Territories. They will be levied on the transactions undertaken by the Union territories of India UGST in GST. The Andaman and Nicobar Islands, Lakshadweep, Dadra and Nagar Haveli, Chandigarh, and Daman, and Diu are the Union Territories. This tax is similar to SGST in terms of apportionment and payment rules.

How is Input Tax Credit (ITC) under GST utilized/apportioned?

CGST SGST IGST UTGST
CGST 1st Not Permitted 2nd Not Permitted
SGST Not Permitted 1st 2nd Not Permitted
IGST 2nd 3rd 1st 3rd
UTGST Not permitted Not Permitted 2nd 1st

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

1. CGST Input Tax – CGST input tax would be set off against CGST output tax, and if any balance remains, it would be settled off against IGST output tax. CGST input tax can’t be utilized to be set off against SGST or UTGST output tax.

2. SGST Input Tax – SGST input tax credit will be set off against SGST output tax, and if any balance remains, it will be settled against IGST output tax. Similarly, the SGST input tax can’t be set off against CGST or UTGST output tax.

3. IGST Input Tax – IGST input tax credit (ITC) will be set off against IGST output tax, followed by CGST output tax. The balance if any of IGST that is remaining unsettled will be set off against SGST. The balance unutilized will be settled against UTGST in the case of Union Territory Output Tax payable in the order mentioned above. You will also got to know about maximum rate of CGST.

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. India has introduced A DUAL GST MODEL.

Do you still have any doubts related to the GST provisions or determination of the type of transaction? You can reach us today, and we will be happy to assist you through the process.

How useful was this post?

Click on a star to rate it!

Average rating 4.6 / 5. Vote count: 189

No votes so far! Be the first to rate this post.

GST Compliance

Leave a Comment