CGST, SGST, and IGST Explained

The Goods and Services Tax (GST) is a destination-grounded indirect tax, which means that an end-user is needed to pay duty on goods and services they buy or consume. The state that consumes the goods or services collects similar duty and not the manufacturer state.

 To understand the connection of GST, it’s necessary to know if the sale is an intrastate (within the same state) or interstate (between different countries) supply.

 Still, CGST and SGST will be applied by the supplier, If the supply of goods happens within the same state. Also, if the supply happens between two different countries, the supplier charges IGST.

 Let’s understand the conception of CGST, SGST, and IGST in detail.

 What’s the full form of CGST?

Central Goods and Services Tax popularly know as CGST. Central Goods and Services Tax is a tax charged on the intrastate supply of goods and services by the central government and governed by CGST Act, 2017.

 State Goods and Services Tax will also be levied on the same Intra State supply but will be governed by the State Government where goods and services have been supplied. This implies that both the Central and the State governments will agree on combining their impositions with an applicable proportion for profit sharing between them.

 What’s the full form of SGST?

 State Goods and Services Tax or SGST is an circular duty levied on intrastate inventories of goods and services by the State Government. As explained over, CGST is levied on the same intrastate supply of goods and services but will be governed by the Central Government.

Still confused! Let’s understand the detail concepts of GST with an example.

Let’s say, Mr. Suresh is a goods or service dealer in Karnataka and has sold goods worth Rs 20,000 to Mr. Raajan who is also a dealer in Karnataka. The Goods and services tax (GST) rate of such goods is 18% comprising CGST of 9% and SGST of 9%. 

So, Mr. Suresh will collect Rs 3,600, of which Rs 1,800 goes to the central government has CGST, and another Rs 1,800 goes to the Karnataka state government SGST. 

ParticularMaharashtraGujaratCentral Government
Step 1: For goods of INR 10,000 sold from A to B10,000* SGST @ 9%= INR 90010,000* CGST @ 9%= INR 900
Step 2: For goods of INR 15,000 sold by B to C15,000*18%= INR 2,700 (-) CGST credit = INR 9,00 (-) SGST credit = INR 9,00 Net tax payable = INR 900
Step 3: For goods of INR 30,000 sold by C to D30,000* SGST @ 9%= INR 2,700 (-) IGST credit = NIL Net payable = INR 2,70030,000 CGST @ 9%= INR 2,700 (-) IGST credit = INR 2,700 Net payable = NIL
Total90027001800
Adjustment(-) 900 Going to the centre(+) 900
Final tax payableNILINR 2,700INR 2,700

What is the full form of IGST 

Integrated Goods and Services Tax or IGST is a duty levied on all inter-state inventories of goods and services. IGST is applicable on any supply of services and goods in both cases within or abroad India. In IGST, the exports are zero- rated and the duty is participated between the central and state government.

 Let’s take another illustration to understand how it works in an IGST case

 Let’s say-so, Mr. Kajal a dealer from West Bengal, sells goods worth Rs. 50,000 to Ms Rahul in Punjab. The GST rate on similar goods is 5% comprising 5% IGST since it’s an interstate supply. The centre collects Integrated Goods and Services Tax of Rs. 2.500.

 

Constantly Asked Questions

 What’s the full form of SGST?

 SGST in India stands for State Goods and Services Tax.

 What kind of duty is GST?

 GST is an circular duty levied on utmost goods and services vended for domestic consumption.

 How do I find my HSN law?

 Go to the GST portal homepage< Click on the HSN check box< elect the duty type< elect HSN chapter by law or name< Search HSN law< elect the apt date< Click on ‘ hunt ’< elect the state

 Can we search the registered GST number by name?

 No, it is not possible to search the GST number by name for all taxpayers. You can only find the details of GST by name for the list of taxpayers participated by state governments and for businesses who have participated GSTIN on their website.

 What’s the GST chance?

The GST council has accommodated over 1300 goods and services under four duty crossbeams of 5, 12, 18, and 28 under GST.

 How numerous types of SGST are there?

 There’s only one type of SGST in India. This circular duty is entered by the State in which the Services or goods are consumed and not by the state in which the goods are being manufactured.

 What’s RCM in GST?

 Rear Charge Medium or RCM is the process of payment of GST by the receiver rather of the supplier. The listed buyer who has to pay GST has to do tone- invoicing for the purchases made. In the case of intra-state purchases, CGST and SGST have to be paid under the rear charge medium ( RCM) by the purchaser.

 What’s IGST in simple words?

 IGST is a duty levied on all the Inter-State supply of services and goods and is governed by the IGST Act. IGST is applicable on any supply of services and goods in both cases of Within or Abroad India.

 What’s the GST number?

 GST number is a unique 15 number identification number assigned to every taxpayer registered under the GST.

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