Types of GST in India

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From paying the parking charges to making an online purchase on our favourite e-commerce platform, we regularly make payments and collect receipts and invoices. But we seldom check what portion of the total amount forms a tax component.

A close lookup on an invoice reveals that a certain percentage of the amount is paid towards GST. But it’s always mentioned either as IGST or a combination of CGST and SGST or UTGST.

In this blog, we will brief you about all the types of GST in India, and the scenarios under which they are applicable. So without further ado, let’s get straight to it.

Additional Read: LTIMindtree Disputes ₹155.7 Crore Demand from Maharashtra GST Dept

Highlights of the Blog

  • Types of GST<
  • Application of Different Types of GST<
  • Conclusion<

Types of GST

First things first. Let’s understand the four types of GST that are currently levied in India.

  • 1. IGST

IGST stands for Integrated Goods and Service Tax. When goods or services are supplied between two different states or union territories, IGST is applied. IGST is also applicable in the case of import and export. However, exports come under the zero-rated category. IGST is levied by the Central Government but shared by both Central and State governments.

  • 2. CGST

CGST stands for Central Goods and Service Tax. It is applicable when goods or services are supplied within the same state or union territory. As the name suggests, CGST is the central Government’s share of tax on the intrastate supply. The rate is equivalent to the rate of SGST, which we will explore next.

  • 3. SGST

State Goods and Service Tax (SGST), is the State Government’s share of indirect tax on intrastate supply of goods and services. The rate of SGST is the same as the rate of CGST applicable on the value of supply, and both are applied levied together.

  • 4. UTGST

Union Territory Goods and Service Tax (UTGST) is levied by Union Territories on intra-union territory supply of goods and services. It is similar to the levy of SGST by the state Government. It is levied together with CGST at an equivalent rate. Union Territories include Delhi, Chandigarh, Puducherry, Dadra Nagar Haveli and Daman and Diu, Ladakh, J&K, Andaman and Nicobar Islands, and Lakshadweep Islands.

Application of Different Types of GST

Let’s understand the application of different types of GST with the help of an example.

Assume that you reside in Pune and purchase goods worth ₹20,000 from a seller in Chennai. In this case, there is an interstate supply of goods between Maharashtra and Tamil Nadu.

If the rate of GST is 18%, then ₹3,600 will be charged in the invoice as IGST. This whole amount will be levied by the Central Government.

Now, rather than buying from a seller in Chennai, if you bought the goods locally from a seller in Pune, then this will be considered as an intrastate supply of goods.

In this case, the GST rate of 18% will be divided into two - CGST 9% and SGST 9%. Thus, ₹1,800 will go to the credit of the Central Government and the other ₹1,800 to the State Government.

If the seller is from any of the above-mentioned Union Territories, then SGST will be replaced with UTGST and the rest of the treatment remains similar.

To Sum Up

GST is still a relatively new tax concept in India and many need clarity when it comes to understanding its types. Therefore, it is important to know all the types of GST applicable and also be aware of items that are exempt from the levy of GST. Such products include raw fruits and vegetables, milk, meat, fish, and other miscellaneous items like newspapers, books, and vaccines.

Disclaimer: Investments in the securities market are subject to market risk, read all related documents carefully before investing.

This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.

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