Confused about CGST, SGST, and IGST in India? These terms represent different components of the Goods and Services Tax (GST), India's unified tax system on goods and services. CGST (Central GST) and SGST (State GST) are levied on transactions within a single state, whereas IGST (Integrated GST) applies to inter-state sales or imports. Each category has its own specific guidelines and tax rates. Understanding these differences is crucial for accurate and smooth tax compliance. Additionally, for international transactions, services like Wise provide real exchange rates and minimal fees, offering an economical and convenient way to handle overseas payments.
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Introduction to CGST, SGST, and IGST
The GST structure in India is divided into three main components: Central Goods and Services Tax (CGST), State Goods and Services Tax (SGST), and Integrated Goods and Services Tax (IGST). This division helps streamline tax collection and ensures proper revenue distribution between the central and state governments. Businesses also need to consider the GST registration fees when registering under the GST system to comply with regulatory requirements.
CGST is the tax collected by the Central Government on an intra-state supply of goods and services. It is governed by the Central Goods and Services Tax Act, 2017, and ensures that the central government receives its share of revenue from within the state.
SGST is the counterpart of CGST, collected by the State Governments on intra-state transactions. The State Goods and Services Tax Act, 2017, governs it, and the revenue collected under SGST remains with the state where the supply is made.
IGST applies to inter-state transactions and imports. It is governed by the Integrated Goods and Services Tax Act, 2017. The revenue collected under IGST is shared between the Central and State Governments based on a predetermined formula. IGST facilitates seamless trade between states and helps maintain a unified market across India.
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These three components ensure a balanced distribution of tax revenue and prevent tax evasion, providing a transparent and efficient tax system. To better understand key aspects of GST, explore the features of GST, which provide deeper insights into its working.