Types of GST in India - CGST, SGST, UGST, and IGST explained

Here is a detailed guide on the three types of GST in India; CGST, SGST, and IGST.
Business Loan
2 min read
8 September 2023

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 the 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 the CGST or the 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 Services 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 an input tax credit. It is a facility that checks cascading taxes and allows business owners to save at every stage of the supply chain.

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What is UGST or Union Territory Goods and Services Tax?

UTGST is a component of the GST regime in India that applies to the supply of goods and services within the Union Territories (UTs) of India. UTGST is levied along with Central GST (CGST) on intra-UT transactions, while integrated GST (IGST) is levied on inter-UT or inter-state transactions. UTGST is collected by the Central Government and shared with the UTs. UTGST has the same tax rates and exemptions as SGST, which applies to the states with legislatures.

The reason behind UTGST applicability in GST is that the Common State GST (SGST) cannot be applied in a Union Territory without a legislature. To address this issue, the GST Council has decided to have a Union Territory GST Law (UTGST) which would be on par with SGST. However, SGST can be applied in Union Territories such as New Delhi and Puducherry. As both have their individual legislatures and can be considered as “states” as per the GST process.

UTGST applies to only those union territories where we do not have a separate legislature and that list includes the following union territories: Chandigarh, Lakshadweep, Daman and Diu, Dadra and Nagar Haveli, Andaman and Nicobar Islands, and Ladakh.

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Frequently asked questions

What are the 3 types of GST registration?

The 3 types of GST registration are Regular, Composition, and Casual. Regular registration is for businesses that carry out regular activities and have a turnover exceeding the threshold limit. Composition registration is for businesses with turnover below the threshold limit and wish to pay tax at a fixed rate. Casual registration is for individuals/businesses that occasionally carry out transactions in a state or union territory where they do not have a permanent place of business.

What is GST and its features?

GST (Goods and Services Tax) is a comprehensive indirect tax levied on the manufacture, sale, and consumption of goods and services in India. Some of its key features include a single tax system, input tax credit, multiple tax rates based on the nature of the item, and implementation of a one-nation-one-tax system.

What is the concept of IGST?

IGST stands for Integrated Goods and Services Tax. It is a type of tax levied by the central government on inter-state transactions of goods and services in India. The IGST is collected by the central government and is then distributed to the state governments in proportion to their share of the total GST collections.