Under the goods and service tax (GST) regime in India, tax computation is made simple by applying a uniform tax computation. GST is subsequently subdivided into four types and applied on the basis of the nature of the transaction and geographical location/country in which the buyer/seller is located.
These four types of GST are:
| S.No | GST Type |
| 1 | Integrated Goods and Services Tax (IGST) |
| 2 | State Goods and Services Tax (SGST) |
| 3 | Central Goods and services Tax (CGST) |
| 4 | Union Territory Goods and Services Tax (UTGST) |
Both types have the general rules and various rates approved under the GST system that calculate tax for the provided goods and/or services.
- Integrated Goods and Services Tax (IGST)
IGST is charged on inter-state sales and therefore applies where supplies are made across borders. The law that guides IGST is called the IGST Act and it is the central government that is charged with the responsibility of collecting these taxes.
For instance, when for example, a trader from Delhi sells goods with a value of Rs. 5,000 to a purchaser in Karnataka, an inter-state supply is made.
In this case, IGST of 18 % would apply and amount to rupees nine hundred and this would go to the central government.
2. State Goods and Services Tax (SGST).
Central GST paid by registered dealers for the purchase of goods from another state is creditable against SGST applicable to intra-state supplies of goods. It is collected by the state government on the turnover of goods and services or on consumption. SGST is levied under the SGST Act and the stated tax is received by the concerned state government.
For instance, if a trader based in Delhi distributes goods to another trader based in the same zone to the worth of Rs. 5,000, then both the CGST and SGST are attracted. If the GST rate is 18%, then the tax will split, so it will comprise of Rs. 450 of CGST and Rs. 450 of SGST. The SGST collection will be given to the state government.
3. Central Goods and Service Tax (CGST)
Just like SGST the CGST is also levied on intrastate operations. Nevertheless, CGST is charged at the central level and is administered by the CGST Act. CGST collected is received by the Centre with the aim of augmenting its own resources.
4. Union Territory Goods and Services Tax (UTGST)
UTGST is the counterpart of SGST and is imposed on supply of goods and services in the Indian Union territories (UTs), i.e., Andaman and Nicobar Islands, Chandigarh, Daman and Diu, Dadra and Nagar Haveli and Lakshadweep.
UTGST is developed and funded by the UTGST Act and the Union Territory Governments, respectively.
UTGST is applied in addition to CGST, and it replaces SGST for union territories. For instance, if a transaction occurs in a Union Territory, both UTGST and CGST will be charged.
Key Differences Between the Types of GST
- Authority collecting GST:
- CGST is collected by the Central Government, SGST by the State Government, and UTGST by the Union Territory Government.
- Priority of Tax Credit Use:
- CGST, SGST, UTGST, and IGST have different rules for applying tax credits based on the transaction type.
- Transactions Applicable:
- IGST applies to inter-state transactions, while CGST and SGST apply to intra-state transactions. UTGST is levied for transactions within Union Territories.
- Benefiting Authority:
- The Central Government benefits from CGST and IGST, while the respective state or Union Territory government benefits from SGST or UTGST.
