India has three types of GST: CGST, SGST, and IGST. This simple division makes it easy to tell the difference between interstate and intrastate goods. It also reduces indirect taxes. Read about these three kinds of GST to find out more.
What is SGST or state goods and service tax?
SGST is the tax that the state government levies on intrastate goods and service transactions. SGST includes all other taxes like entertainment tax, luxury tax, and purchase tax. UGST or union territory goods and service tax replaces SGST in union territories like Chandigarh.
What is CGST or central goods and service tax?
The central government levies GST on intrastate goods and service transactions. It collects the revenue generated through CGST The government levies CGST along with SGST or UGST, and the state and centre share the revenues.
For example, you are a Bengaluru-based dealer and are selling to another dealer in Bengaluru. Since it is an intrastate sale, the government will apply both CGST and SGST. Let us say that your transaction of goods is worth Rs. 30,000, and it attracts 18% GST. Then the state government will collect 9% of this amount as SGST. The centre collects a matching amount as CGST.
What is IGST or integrated goods and service tax?
Integrated Goods and Service Tax are the tax levied on interstate goods and service transactions. It applies to imports and exports as well. Under IGST, both the centre and the state share the taxes charged.
IGST also helps you claim input tax credit. It is a facility that checks cascading tax and allows business owners to save at every stage of the supply chain.
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