Key Difference Between SGST, CGST, IGST, and UTGST
GST is a type of indirect tax levied on the supply of products and services. It came into existence in the year 2017 to eliminate the tax on tax. With the introduction of GST in India, small businesses have got relief from paying various indirect taxes on the supply of goods and services.
Goods and Services Tax is necessary for the smooth running of business operations. It is very easy to complete the procedure of GST Registration from the online portal these days. GST is of 4 kinds namely SGST, CGST, IGST, and UTGST. Now, we will discuss the meaning of these terms and the differences between them.
Different Types of GST
There are 4 types of GST such as SGST, CGST, IGST, and UTGST. Let us discuss each one in detail in this blog:
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State Goods and the Service Tax
SGST is the State Goods and Service Tax. This tax is charged on all the transactions that take place within the state. It is levied on the state where the purchase and selling of goods take place.
SGST eliminated all the other taxes on intrastate transactions like luxury tax, state cess, VAT, and entertainment tax. Income earned through State Goods and Services Tax (SGST) goes only to the state government.
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Central Goods and Service Tax
The full form of CGST is Central Goods and Service Tax. This tax is charged by the Indian Government on the transactions of goods and services that take place within the same state. Every intrastate transaction involves Central Goods and Services Tax (CGST).
The rate of CGST is similar to SGST. This tax also eliminated many other types of taxes such as customs duty, service tax, and central excise duty.
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Integrated Goods and Services Tax or IGST
Integrated Goods and Services Tax (IGST) is the tax that is levied on all the transactions that take place between two states. The tax is charged on interstate transactions. The main act that governs this tax is IGST Act.
The Central Government is the main authority to collect this tax. Income earned through IGST is divided between Central Government and the different states.
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Union Territory Goods and Services Tax or UTGST
Union Territory Goods and Services Tax (UTGST) is a type of State Goods and Services Tax. This tax is charged on all the transactions that take place in the Union Territories of India. This tax is applicable in Chandigarh, Andaman, and Nicobar Islands, Lakshadweep, Dadra, and Nagar Haveli, and Daman Diu.
Income from UTGST goes to the Union Territory Government. It is charged with CGST in these Union Territories.
Differences between different kinds of GST
Major differences |
SGST (State Goods and the Service Tax) |
CGST (Central Goods and Service Tax) |
IGST (Integrated Goods and Service Tax) |
UTGST (Union Territory Goods and Service Tax) |
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Applicability |
This tax is applicable on intrastate transactions. Intrastate transactions mean the transactions of goods and services that happen within the same state. |
Central Goods and Service Tax is levied on the supply of goods and services that takes place in the same state. This tax is charged on intrastate transactions. |
Integrated Goods and Service Tax or IGST is charged on all the transactions that place between 2 states. |
Union Territory Goods and Service Tax is levied on the transactions of goods and services that happen in various Union Territories of India. |
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Collection |
SGST is collected by the State Government. |
CGST is collected by the Central Government. |
IGST is collected by the Central Government. |
UTGST is collected by the Government of Union Territory |
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Who receives income? |
Income earned under SGST goes to the State Government |
Central Government earns revenue in CGST |
Income generated under IGST is divided between State and Central Government |
Income earned through UTGST goes to the government of the Union Territories of India. |
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Input Tax adjustment |
An input tax credit of SGST can be used against IGST or SGST but not CGST |
You can use the input tax credit of CGSGT against CGST or IGST but not against SGST. |
You can use the Input Tax Credit of IGST against CGST or SGST or IGST |
The input tax credit cannot be used against SGST or CGST. |
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Which taxes are removed? |
After the introduction of SGST, many taxes are removed. They include Taxes on lottery, luxury tax, State sales tax, entry tax, betting and gambling, and Entertainment tax. |
CGST removed many kinds of indirect taxes in the country. These taxes include service tax, Central Excise duty, Special additional duty of customs, central sales tax CST, and some other surcharges and cesses. |
Advantages of GST Registration
Every businessman (except in northeastern states) who has an annual turnover of more than INR 20 Lakhs in India must file GST Return. There are various benefits of GST Registration such as:
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Single Tax System
Many indirect taxes on the continuous supply of goods increase the rate of the products. The process of GST Annual filing removed all the kinds of indirect taxes on the products and services. GST has removed the cascading effect of taxes in the country. Businessmen have to pay only one tax on the products and services.
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Enhances Competition in Market
Because of the removal of many indirect taxes, transaction costs have come down. Reduction in the price of the products and transaction costs improve competition in the market. Besides, the inter-state check posts are also eliminated after the introduction of GST. Moreover, GST will improve the working of the manufacturing sector in India.
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Simple to Administer and Manage
Before the introduction of GST, there were many kinds of indirect taxes levied on products and services. State and Central governmentshave to make effort to administer these indirect taxes. GST made it simple for both State and Central governments to manage and administer GST.
There is a single tax system in the country now. It also reduces the cost of the products and services because of removal of indirect taxes.