There are four types of GST: Integrated Goods and Services Tax (IGST), State Goods and Services Tax (SGST), Central Goods and Services Tax (CGST), and Union Territory Goods and Services Tax (UTGST). Each of them has a different tax rate.
A significant amount of confusion has been witnessed regarding the new indirect tax regime under the Goods and Services Tax (GST) which was rolled out on 1 July 2017. A number of local goods and services taxes have been subsumed under the Goods and Services Tax (GST).
A number of state and central taxes were replaced by the Goods and Services Tax (GST). Below is a list of the levies that were replaced as a result of the legislation:
- Taxes that are levied by the states include the following:
- A value-added tax (VAT) or sales tax is a tax levied on goods and services
- Taxation (Octroi)
- Taxes on entertainment
- A tax on the sale of lottery tickets, betting tickets, or gambling tickets
- Tax on the purchase of goods and services
- Taxes on luxury goods
- The following is a list of the central taxes:
- Taxes on services.
- In addition to the excise duty, there is an additional charge.
- Taxes such as Central Excise Duty.
GST Types and Explanations
There are four types of GST under the newly implemented tax system:
- GST (Integrated Goods and Services Tax)
- A state tax on goods and services (SGST)
- Tax on goods and services collected at the central level (CGST)
- UTGST (Union Territory Goods and Services Tax)
The government has also fixed different taxation rates under each of these categories, which will apply to the payment of taxes for goods and/or services.
Assume the following: the IGST (Integrated Goods and Services Tax)
As part of the GST regime, the Integrated Goods and Services Tax (IGST) is assessed on imports and exports of goods and/or services that are supplied between two states. The IGST Act governs the IGST. The Central Government is responsible for collecting taxes under IGST. The Central Government divides the collected taxes among the various states after collecting them. In the case of a trader from West Bengal selling goods worth Rs.5,000 to a customer in Karnataka, IGST will apply since the transaction is interstate. A trader will charge Rs.5,900 if GST is charged on the goods at 18%. IGST collected is Rs.900, which will be paid to the government.
2. SGST stands for State Goods and Services Tax
SGST is an intrastate (within the same state) tax under the new gst registration online regime. A state GST and a central GST are both levied on intrastate supplies of goods and/or services. A state’s GST or SGST, however, only applies to goods and/or services purchased or sold within its borders. State governments are solely responsible for claiming SGST revenue. As an example, if a West Bengal trader sells goods worth Rs.5,000 to a West Bengal customer, the CGST and SGST will be applied to the transaction. The GST rate of 18% will be divided equally into 9% CGST and 9% SGST. There will be a total charge of Rs.5,900 by the trader in this case. GST revenue under the heading of SGST, namely Rs.450, will be paid to the West Bengal state government.
3. CGST stands for Central Goods and Services Tax
In the same way as State GST, the Central Goods and Services Tax (CGST) is a tax that is applied to intrastate transactions (within the same state). In accordance with the CGST Act, the CGST is regulated. Central Government collects CGST revenue. In the example above, if a trader from West Bengal sells goods worth Rs.5,000 to a West Bengal customer, then the GST applicable on the transaction will be partly CGST and partly SGST. GST charged at 18% will be divided equally into CGST and SGST of 9% each. As a result, Rs.5,900 will be charged by the trader. As a result of GST, a portion of the revenue, namely 450 rupees, will go to the Central Government.
4. UTGST, or Union Territory Goods and Services Tax
In the Union Territories (UTs) of India, the Union Territory Goods and Services Tax (UTGST) is levied on the supply of goods and/or services. UTGST is applicable in Andaman and Nicobar Islands, Chandigarh, Daman Diu, Dadra and Nagar Haveli, and Lakshadweep. The UTGST Act governs the UTGST. Union Territory government collects UTGST revenue. In Union Territories, the UTGST replaces the SGST. Union Territories will therefore be subject to the UTGST in addition to the CGST.