What are the Different Types of GST in India?

The full form of SGST is State Goods and Services Tax and this type of GST in India is charged by state governments when there is an intra-state supply of goods or services. So, SGST in India is applicable when the supply occurs within the same state. The rate of SGST varies according to applicable GST rates that depend on the specific goods/services being supplied.

SGST allows state governments to directly and easily collect revenue generated from GST when there the supply occurs within the same state. The revenue collected via SGST can be utilized by the state government(s) to help fund various projects like infrastructure, development, and investments that can support the state’s future growth. The SGST paid by businesses can be offset against the input tax credit which can bring down the overall GST liability of the registered entity.

UTGST full form is Union Territory Goods and Services Tax. This type of GST is applicable on the supply of goods or services within the union territories of India, including Delhi, Andaman and Nicobar, Ladakh, Dadra and Nagar Haveli and Daman and Diu, Chandigarh, Jammu and Kashmir, Puducherry, and Lakshadweep. So, in effect, UTGST and SGST are similar and the only difference is that the former applies to Union Territories while the latter applies to states in India.

The central government, in consultation with union territories, is also responsible for determining the UTGST rate, and the rate of UTGST is usually the same as the SGST rate for the applicable goods and services.

The government of the Union Territory (UT) is responsible for the collection of UTGST and the tax applies to any supply of eligible goods/services within the union territory. Like other taxes collected by union territories, revenue collected via UTGST can be utilized to help fund development and growth projects within union territories.

The full form of CGST is Central Goods and Services Tax and this type of GST is collected by the central government in India when intra-state or intra-union territory supply of eligible goods and services occurs. The applicable rate of CGST for any specific good or service is determined by the GST council and collected by the central government. The revenue generated via this type of GST goes directly to the central government. So, the primary difference between CGST and SGST is the government entity that levies and collects the due tax.

All businesses registered within the GST regime are affected by CGST and are required to file their CGST returns periodically including details about intra-state transactions. Any CGST paid by a GST-registered entity can be used as input tax credit and offset against the GST paid on purchases made by the business. This, in turn, helps reduce the overall GST liability of the GST-registered entity.

In the types of GST discussed earlier, the supply of goods/services had occurred with the same state or union territory. The situation changes a bit when inter-state supply of goods or services is made by a GST registered entity and a different GST type – IGST is applicable in such cases. IGST full form is Integrated Goods and Services Tax and this is the type of GST which is levied on the supply of goods/services that cross over state or union territory (UT) borders in India.

IGST is applicable to businesses engaged in inter-state trade, like when a business in one state or UT supplies goods or services to customers in a different state or UT. The central government is responsible for collecting IGST and the revenue is divided between the central and state or UT governments. The specific tax rate of IGST is usually the sum of CGST and SGST or UTGST rates which are applicable to the transaction. In a very small number of cases, the IGST rate may be higher than the sum of CGST and SGST rates, however such decisions are made on a case by case basis.

At the time of supply of goods and services within India, a few different scenarios may arise. Here is how different types of GST are applicable to 3 different scenarios