Introduction

India has adopted a dual Goods and Services Tax (GST) which is imposed concurrently by the Centre and States, i.e. Centre and States simultaneously tax goods and services. Centre has the power to tax intra-State sales & States are empowered to tax services. GST extends to whole of India including the State of Jammu and Kashmir.

WHAT IS CGST?

CGST  is a tax levied under the CGST Act on the intra-state supplies of goods and services. Hence in case of intra-state supplies of goods and services, both the Central and State government would combine their levies with an appropriate revenue sharing agreement between them.

• CGST is applicable on both, goods and services.
• CGST is levied by the Central Government through a separate statute on all transactions of goods and services made for a consideration.
• Proceeds would be shared between the Central and State Government.

WHAT IS SGST or UTGST?

SGST is a tax levied under the SGST Act on intra-state supplies of goods and services, that is administered by the respective State Government.  It is collected by the individual states and union territories when the supply occurs within the same state/union territory. For example, when a good is both manufactured and sold within U.P., SGST will be levied by the U.P. state.

WHAT IS IGST?

IGST or Integrated GST is levied by the Central government when the location of the supplier of a good/service and the place of consumption lie in different states. The IGST so collected is subsequently divided between the State and Centre. IGST is the tax levied under the IGST Act on the supply of any goods and/or services during inter-state trade across India

Hence, for intra-state transactions, both SGST and CGST are levied. While for inter-state transactions only IGST is collected, which is later divided between the state and the Centre.  This does not create any difference for the consumer as the combined rate of SGST and CGST is always equal to the IGST rate. This system ensures smooth flow of taxes between the state and the Centre without complicating the tax rates for the seller or the consumer.

Utilisation of CGST, SGST and IGST

CGST credit cannot be utilized for payment of SGST/UTGST and SGST/UTGST credit cannot be utilized for payment of CGST. However, cross utilization is allowed between CGST/SGST/UTGST and IGST, i.e. credit of IGST can be utilized for the payment of CGST/SGST/UTGST and vice versa.

IGST CREDIT UTILISATION

IGST input tax credit can be used to offset IGST, CGST and SGST or UTGST  (in that order)

CGST CREDIT UTILIZATION 

CGST input tax credit can be used to offset CGST and IGST (in that order)

SGST or UTGST CREDIT UTILIZATION

SGST input tax credit can be used to offset SGST or UTGST and IGST (in that order)