Types of GST in India – CGST, SGST, IGST, and UTGST
Last Updated on December 6, 2024
What is the Goods & Service Tax(GST)?
Goods & service tax is a unified tax system that combines multiple indirect taxes. It simplified the tax structure in India and contributed to growth through a uniform taxation system.
The History Of GST
GST was implemented in India on July 1st, 2017. Under GST, various State & Central taxes are unified under one platform. This transparent and efficient tax system made inter-state business easy. The launch of GST was celebrated with a midnight parliament session.
Taxes Replaced by GST
The implementation of the Goods and Services Tax (GST) replaced a number of taxes of both the state and the centre. The taxes that were replaced are listed below:
- Value Added Tax (VAT) or Sales Tax
- Octroi
- Entertainment Tax
- Tax on Lottery or Betting or Gambling
- Purchase Tax
- Luxury Tax
- Service Tax
- Additional Excise Duty
- Central Excise Duty & MORE
Types of GST in India
In India, there are four types of GST: CGST, SGST, IGST, and UTGST.
- CGST: Central Goods and Services Tax
- SGST: State Goods and Services Tax
- IGST: Integrated Goods and Services Tax and
- UTGST: Union Territory Goods and Services Tax
1. Central Goods & Services Tax (CGST)
Similar to GST, the Central Goods and Services Tax of CGST is a tax under the GST regime that is applicable to transactions within states. The state government collects revenue in such cases. The CGST is governed by the CGST Act. As mentioned in the above instance, if a trader from West Bengal has sold goods to a customer in West Bengal worth Rs.7,000, then the GST applicable on the transaction will be partly CGST and partly SGST.
If the rate of GST charged is 18%, it will be divided equally in the form of 9% CGST and 9% SGST. The total amount to be charged by the trader, in this case, will be Rs. 8,260. Out of the revenue earned from GST under the head of CGST, i.e. Rs.630, will go to the Central Government in the form of CGST.
How to Calculate CGST?
| Details | Calculation | Example | Amount (₹) |
| Transaction Type | Intra-state Sale | The Seller in Karnataka sells goods within Karnataka. | |
| Base Price | Value of the goods/services | ₹7,000 | ₹7,000 |
| GST Rate | Applicable GST slab rate | 18% (split equally into CGST and SGST) | |
| CGST Rate | Half of the total GST rate | 18% ÷ 2 = 9% | |
| CGST Amount | (Base Price) × (CGST Rate ÷ 100) | ₹7,000 × (9 ÷ 100) | ₹630 |
| SGST Amount | (Base Price) × (SGST Rate ÷ 100) | ₹7,000 × (9 ÷ 100) | ₹630 |
| Total Invoice Value | Base Price + CGST Amount + SGST Amount | ₹7,000 + ₹630 + ₹630 | ₹8,260 |
| Recipient of CGST | Collected by the Central Government. | CGST = ₹630 | ₹630 |
2. State Goods & Service Tax (SGST)
When goods are traded within states, the State Goods and Services Tax or SGST becomes applicable. In this case, both GST and Central GST taxes become applicable.
However, the state levies the State GST or SGST on the goods and/or services purchased or sold within the state. It is governed by the SGST Act. The revenue earned through SGST is solely claimed by the respective state government.
For instance, if a trader from West Bengal has sold goods to a customer in West Bengal worth Rs.7,000, then the GST applicable on the transaction will be partly CGST and partly SGST.
If the rate of GST charged is 18%, it will be divided equally in the form of 9% CGST and 9% SGST. The total amount to be charged by the trader, in this case, will be Rs. 8,260. Out of the revenue earned from GST under the head of SGST, i.e. Rs.630, will go to the West Bengal state government in the form of SGST.
How to Calculate SGST?
| Details | Calculation | Example | Amount (₹) |
| Transaction Type | Intra-state Sale | The Seller in Karnataka sells goods within Karnataka. | |
| Base Price | Value of the goods/services | ₹7,000 | ₹7,000 |
| GST Rate | Applicable GST slab rate | 18% (divided equally into SGST and CGST) | |
| SGST Rate | Half of the total GST rate | 18% ÷ 2 = 9% | |
| CGST Rate | Half of the total GST rate | 18% ÷ 2 = 9% | |
| SGST Amount | (Base Price) × (SGST Rate ÷ 100) | ₹7,000 × (9 ÷ 100) | ₹630 |
| CGST Amount | (Base Price) × (CGST Rate ÷ 100) | ₹7,000 × (9 ÷ 100) | ₹630 |
| Total Invoice Value | Base Price + SGST Amount + CGST Amount | ₹7,000 + ₹630 + ₹630 | ₹8,260 |
| Recipient of Tax | SGST goes to the state government; CGST goes to the central government. | SGST = ₹630, CGST = ₹630 | ₹630 (SGST) / ₹630 (CGST) |
3. Integrated Goods and Services Tax (IGST)
IGST is the tax under GST that is applied to the interstate goods/services supply as well as imports/exports. The Central Government is responsible for collecting taxes under IGST under respective states.
For example, if a seller from Karnataka sells goods worth Rs. 7000 to a customer in Orissa, then IGST will be applicable as it is an interstate transaction. If the GST rate charged in such a situation is 18%, the seller will charge Rs. 8260 for the goods. The IGST collected here is Rs. 1260, which will go to the central government.
How to Calculate IGST?
| Details | Calculation | Example | Amount (₹) |
| Transaction Type | Interstate Sale | The Seller in Karnataka sells goods to Orissa. | |
| Base Price | Value of the goods/services | ₹7,000 | ₹7,000 |
| GST Rate | Applicable GST slab rate | 18% | |
| IGST Amount | (Base Price) × (GST Rate ÷ 100) | ₹7,000 × (18 ÷ 100) | ₹1,260 |
| Total Invoice Value | Base Price + IGST Amount | ₹7,000 + ₹1,260 | ₹8,260 |
| Recipient of Tax | IGST collected by the central government. | IGST = ₹1,260 | ₹1,260 |
4. Union Territory Goods and Services Tax (UTGST)
The Union Territory Goods and Services Tax or UTGST is the counterpart of the State Goods and Services Tax (SGST), which is levied on the supply of goods and/or services in the Union Territories (UTs) of India.
The UTGST is applicable to the supply of goods and/or services in the Andaman and Nicobar Islands, Chandigarh, Daman Diu, Dadra, and Nagar Haveli, and Lakshadweep. The UTGST is governed by the UTGST Act.
The revenue earned from UTGST is collected by the Union Territory government. The UTGST is a replacement for the SGST in Union Territories. Thus, the UTGST will be levied in addition to the CGST in Union Territories.
For instance, if a seller in the Andaman and Nicobar Islands sells goods worth ₹7,000 with a GST rate of 18%, the tax is equally split into 9% UTGST and 9% CGST. This results in ₹630 each for UTGST and CGST, making the total invoice value ₹8,260. The UTGST revenue is collected by the Union Territory government, replacing SGST, and ensures a uniform taxation system across the Union Territories.
How to Calculate UTGST?
| Details | Calculation | Example | Amount (₹) |
| Transaction Type | Intra-UT Sale | The Seller in Andaman and Nicobar Islands sells goods within the UT. | |
| Base Price | Value of the goods/services | ₹7,000 | ₹7,000 |
| GST Rate | Applicable GST slab rate | 18% (split equally into CGST and UTGST) | |
| UTGST Rate | Half of the total GST rate | 18% ÷ 2 = 9% | |
| CGST Rate | Half of the total GST rate | 18% ÷ 2 = 9% | |
| UTGST Amount | (Base Price) × (UTGST Rate ÷ 100) | ₹7,000 × (9 ÷ 100) | ₹630 |
| CGST Amount | (Base Price) × (CGST Rate ÷ 100) | ₹7,000 × (9 ÷ 100) | ₹630 |
| Total Invoice Value | Base Price + UTGST Amount + CGST Amount | ₹7,000 + ₹630 + ₹630 | ₹8,260 |
| Recipient of UTGST | Collected by the Union Territory government. | UTGST = ₹630 | ₹630 |
Comparison Between Different Types of GST
| GST Type | Description | Applicability |
| CGST (Central GST) | Tax levied by the Central Government on intra-state supply of goods/services. | Applicable when goods/services are supplied within a state. |
| SGST (State GST) | Tax levied by the State Government on intra-state supply of goods/services. | Applicable alongside CGST when the supply is within the same state. |
| IGST (Integrated GST) | Tax levied by the Central Government on the inter-state supply of goods/services. | Applicable for transactions between different states or Union Territories. |
| UTGST (Union Territory GST) | Tax levied by Union Territories on intra-UT supply of goods/services. | Applicable in Union Territories without legislatures (e.g., Andaman & Nicobar Islands, Lakshadweep). |
| GST Compensation Cess | Additional cess on certain goods/services to compensate States for revenue losses. | Levied on luxury items and sin goods, in addition to CGST/SGST/IGST. |
Who all have to Pay GST?
- People who are registered under GST and make taxable supplies.
- People who are registered under GST need to pay using the reverse charge mechanism.
- People who are registered under GST are required to deduct tax at source (TDS).
- E-commerce operators registered under GST need to collect tax at source (TCS).
- People who supply goods and services on behalf of manufacturers.
Conclusion
The implementation of GST has revolutionized India’s tax system, fostering economic growth by simplifying tax compliance and promoting transparency. Its unified structure facilitates smoother trade, especially between states, and ensures equitable distribution of tax revenue among central, state, and union territory governments. GST continues to evolve through periodic revisions by the GST Council, making it a dynamic system tailored to the nation’s economic needs. Embracing GST not only benefits businesses with streamlined processes but also strengthens the foundation for a more organized and progressive economy.
