Types of GST: SGST, CGST and IGST meaning and applicability

Introduction

Goods and Services Tax, or GST, tax regime has been implemented in India to simplify the taxation process by subsuming various indirect taxes. After GST registration online, taxpayers need to pay GST on the supply of a wide range of goods and services. There are three types of GST: SGST, CGST, and IGST. In this article, we will discuss these types of GST, their differences, and their applicability.

Types of GST

SGST (State Goods and Services Tax)

Firstly, the SGST, or State Goods and Services Tax, is a tax levied by the state government on intra-state supplies of goods and services. Therefore, for the supply of goods or services within the state, the state government charges SGST. The revenue generated from SGST goes to the state government. Each state in India has its own SGST act, and the rate of SGST can vary from state to state.

CGST, (Central Goods and Services Tax)

Secondly, the GST, or Central Goods and Services Tax, is a tax levied by the central government on intra-state supplies of goods and services. Hence, for the supply of goods or services within the same state, the central government charges CGST. The revenue generated from CGST goes to the central government. CGST is governed by the Central Goods and Services Tax Act, 2017, and the rate of CGST is the same throughout India.

IGST, or Integrated Goods and Services Tax

Finally, the IGST, or Integrated Goods and Services Tax, is a tax levied by the central government on inter-state supplies of goods and services. Hence, for the supply of all goods or services from one state to another, the central government charges IGST. The State and central governments, both, share the revenue generated from IGST. IGST is governed by the Integrated Goods and Services Tax Act, 2017, and the rate of IGST is the same throughout India.

Examples of different types of GST

To understand the applicability of these types of GST, let’s take an example. Suppose a dealer in Mumbai, Maharashtra sells goods worth Rs. 10,000 to a dealer in Ahmedabad, Gujrat. In this case, the dealer in Mumbai will charge IGST on the supply of goods, and the dealer in Ahmedabad can claim the IGST paid as input tax credit. The revenue generated from IGST is shared by the central and state governments.

On the other hand, if the dealer in Mumbai sells goods worth Rs. 10,000 to a customer in Pune, since both the buyer and dealer are in the same state, the dealer will charge CGST and SGST on the supply of goods. The revenue generated from CGST will go to the central government, and the revenue generated from SGST will go to the state government.

Differences between the types of GST

While SGST, CGST, and IGST are all types of GST, they differ in terms of their applicability, revenue distribution, rates, compliance requirements, and input tax credits. Understanding these differences is important for businesses to ensure compliance with GST laws and regulations. Let’s take a closer look:

	SGST	CGST	IGST
Applicability	Firstly, SGST is levied by the State government on the sale of goods and services within a state	CGST is levied by the Central government on the sale of goods and services within a state	IGST is levied by both, State and Central governments, on the sale of goods and services from one state to another.
Revenue distribution	The revenue collected from SGST goes to the State government	The revenue collected from CGST goes to the Central government	The revenue collected from IGST goes to the State and Central government
Rates	SGST can vary from state to state	CGST rates are uniform across the country	IGST rates are uniform across the country
Input tax credit	SGST and IGST input tax credits can be used to pay SGST liabilities.	CGST and IGST input tax credits can be used to pay CGST liabilities.	IGST, SGST, and CGST input tax credits can be used to pay IGST liabilities.

Other Types of GST

UTGST or Union Territory Goods and Services Tax is a type of GST charged by Union Territories on intra-state supply of goods and services. It is levied instead of SGST and is levied with CGST. The UTGST Act of 2017 governs UTGST. For UTGST tax liabilities, UTGST input tax credit as well as IGST input tax credit can be used. Additionally, UTGST input tax credit can be used to pay IGST tax liabilities as well.

Conclusion

In conclusion, there are three types of GST: SGST, CGST, and IGST. Its purpose is to simplify the taxation process and ensure the seamless movement of goods and services across the country. After you get a GST number, then you need to use it to identify the types of tax you need to pay. While SGST and CGST are levied on intra-state supplies, IGST is levied on inter-state supplies. Hence, understanding the applicability of these types of GST is crucial for businesses operating in India.

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