Goods and Services Tax (GST) in India includes Central GST (CGST), State GST (SGST), Integrated GST (IGST), and Union Territory GST (UGST). These components harmonize and streamline taxation across the country, fostering a unified economic landscape.

Types of GST in India – Overview

The Goods and Services Tax (GST) is a value-added tax (VAT) implemented in India on July 1, 2017. It has subsumed many indirect taxes levied earlier, such as excise duty, service tax, value-added tax (VAT), central sales tax (CST), and entry tax.

The GST rate on goods and services is determined by the GST Council, which is a body consisting of the Union Finance Minister and the Finance Ministers of all the states and Union Territories. The GST rates are divided into four slabs: 5%, 12%, 18%, and 28%. There are also some goods and services that are exempt from GST. The GST is collected by the Central Government and the State Governments and is shared between them according to a predetermined formula. The GST (Goods and Services Tax) has helped to simplify the Indian tax system and reduce the cascading effect of taxes.

Example for CGST and SGST with calculation

Suppose a trader in Maharashtra sells goods worth ₹10,000 to a consumer in Maharashtra. The applicable GST rate is 18%. In this case, the trader will have to charge ₹900 CGST and ₹900 SGST for a total of ₹1800 GST.

Example for IGST with calculation

Suppose a trader in Maharashtra sells goods worth ₹10,000 to a consumer in Karnataka. The applicable GST rate is 18%. In this case, the trader will have to charge ₹1800 IGST.

Replaced Taxes with GST

The GST has subsumed many of the indirect taxes that were levied earlier, such as:

• Excise duty
• Service tax
• Value-added tax (VAT)
• Central sales tax (CST)
• Entry tax
• Luxury tax
• Entertainment tax
• Octroi
• Purchase tax

The GST has helped to simplify the Indian tax system and reduce the cascading effect of taxes.

Difference Between Types of GST

The four types of GST in India are:

• Integrated Goods and Services Tax (IGST): IGST is levied on all interstate supplies of goods and services, as well as on imports and exports.
• Central Goods and Services Tax (CGST): CGST is levied on all intrastate supplies of goods and services, along with SGST.
• State Goods and Services Tax (SGST): SGST is levied on all intrastate supplies of goods and services, along with CGST.
• Union Territory Goods and Services Tax (UTGST): UTGST is levied on all supplies of goods and services within a Union Territory and is similar to SGST.

The main difference between the different types of GST is the place of supply. IGST is levied on interstate supplies, while CGST and SGST are levied on intrastate supplies.

Types of GST Tax

The GST is a consumption tax, which means that it is levied on the final consumer of goods and services. The GST is also a value-added tax, which means that it is levied on the value addition at each stage of the production and distribution process.

The GST rates are divided into four slabs: 5%, 12%, 18%, and 28%. There are also some goods and services that are exempt from GST.

Inter-State transactions

For inter-state transactions, the supplier will have to charge IGST to the customer. The IGST rate is equal to the sum of the CGST rate and the SGST rate. The supplier will then deposit the IGST collected to the government. The government will then distribute the IGST to the Central Government and the State Government in which the goods or services are consumed.

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Intra-State transactions

For intrastate transactions, the supplier will have to charge CGST and SGST to the customer. The CGST and SGST rates are fixed by the GST Council. The supplier will then deposit the CGST and SGST collected to the government. The government will then distribute the CGST to the Central Government and the SGST to the State Government.

Example

Let’s say a trader in Maharashtra sells goods worth ₹10,000 to a consumer in Karnataka. The applicable GST rate is 18%. In this case, the trader will have to charge ₹1800 IGST. The trader will then deposit the IGST collected to the government. The government will then distribute the IGST to the Central Government and the Karnataka State Government.

Goods Exempted from GST Payment

The following goods are exempt from new GST registration payment in India:

• Food items: Cereals, edible fruits and vegetables, milk, curd, eggs, honey, etc.
• Agricultural inputs: Seeds, fertilizers, pesticides, etc.
• Essential items: Salt, sugar, jaggery, etc.
• Educational and medical supplies: Books, notebooks, pens, pencils, medicines, etc.
• Handicrafts: Handmade goods produced by artisans.
• Religious items: Holy books, idols, etc.

How Are Input Tax Credits Adjusted? Offset Liability in GST

The input tax credit is the credit that a taxpayer gets on the GST paid on inputs or input services used in the production or supply of goods or services.

To offset liability in GST, a taxpayer can use the input tax credit available to them. The input tax credit can be used to reduce the GST liability on the output goods or services.

If the input tax credit is more than the GST liability on the output goods or services, the taxpayer can claim a refund of the excess input tax credit.

Rates of CGST, SGST, and IGST on Common Commodities

Commodity	CGST (%)	SGST (%)	IGST (%)
Food items	0	0	0
Agricultural inputs	0	0	0
Essential items	0	0	0
Educational and medical supplies	5	5	12
Handicrafts	5	5	12
Religious items	0	0	0

Which products are not levied under GST?

The following products are not levied under GST:

• Petroleum products
• Alcohol for human consumption
• Electricity
• Tobacco products
• Lottery tickets
• Betting and gambling services

FAQ on Types of GST

What are the various types of GST that are currently applicable?

There are four types of GST that are currently applicable in India:

• Integrated Goods and Services Tax (IGST)
• Central Goods and Services Tax (CGST)
• State Goods and Services Tax (SGST)
• Union Territory Goods and Services Tax (UTGST)

What is the full form of CGST?

CGST stands for Central Goods and Services Tax.

What is the full form of IGST?

IGST stands for Integrated Goods and Services Tax.

What is the full form of SGST?

SGST stands for State Goods and Services Tax.

Who is Liable to Pay GST?

Any person who supplies goods or services in India is liable to pay GST. This includes individuals, businesses, and government agencies.

What is CGST, and where is it applied?

CGST is a tax that is levied on all intrastate supplies of goods and services. It is collected by the Central Government and shared with the State Governments.

If I make a sale from one state to another, which GST is applicable?

If you make a sale from one state to another, IGST is applicable. IGST is a tax that is levied on all interstate supplies of goods and services. It is collected by the Central Government and shared with the State Governments.

Who governs the rates and implementations of GST?

The GST Council governs the rates and implementations of GST. The GST Council is a body that consists of the Union Finance Minister and the Finance Ministers of all the states and Union Territories.

How do businesses determine which type of GST to apply?

The type of GST that a business has to apply depends on the place of supply. If the place of supply is within the same state, then CGST and SGST are applicable. If the place of supply is in another state, then IGST is applicable.

What determines if CGST, SGST or IGST is applicable?

The place of supply determines which type of GST is applicable. The place of supply is the place where the goods or services are consumed. If the goods or services are consumed within the same state, then CGST and SGST are applicable. If the goods or services are consumed in another state, then IGST is applicable.