CGST, SGST and IGST Explained

Confused about CGST, SGST and IGST? Get to know about these taxes here

The hardship and tiring efforts of the government paved the way for successful roll out of Goods and Service Tax. In the latest events, Jammu & Kashmir Assembly has passed a resolution for implementation of GST and in the coming days there is a good chance that GST will be also be implemented in the state of J&K thereby covering the entire nation. The structure of GST as being highlighted all this time was “One Nation, One Tax” but the new some concepts like CGST, SGST, IGST and UGST are confusing the people and creating a doubt in their minds regarding the credibility of this tax structure. Let us see as to what do these concepts mean.

Before going into the details let us know as to what are the full forms of these acronyms:

  • CGST- Central goods and Service Tax
  • SGST- State Goods and Service Tax
  • IGST- Inter-state Goods and Service Tax
  • UTGST- Union Territory Goods and service Tax

The answer to the question as to which kind of tax (CGST, SGST or IGST) would be levied will depend on the movement of goods and Services. In case of inter-state supply of goods and services, IGST will be collected. IGST will also be collected in case of imports. In case of supply of goods and services within the state CGST and SGST will be levied. The recipient of the tax will be the state in which the goods and services are received. In case. There will be no tax sharing between the State Government and Central Government in case of IGST. But in case of other two taxes, the amount of tax collected will be shared between the Central Government (CGST) and the State Government (SGST). If the supply of goods and services is done in Union Territory then UTGST will be applicable.

The credit of CGST, SGST, IGST and UTGST paid will be available and the same will be adjusted against while paying the taxes on the next stage of the supply chain as it used to be in case of VAT. But a point to be noted is that any credit availed for IGST will be adjusted in a sequence. Firstly, it shall be adjusted against IGST then CGST and then if any balance remains then it can be used to set of SGST. But in order to avail the credit you must get yourself registered in GST and should file the GST returns timely. Proper invoicing is also mandatory to avail the credit of taxes paid. It would be just a matter of time to get accustomed to the new tax regime of Goods and Service Tax. It is important to note that while preparing the invoices or during billing, proper segregation of CGST and SGST is a must or else you would not be getting the credit of CGST or SGST that you have paid. So, make sure that you comply with these norms so that you can avail the credit and eventually the cost of goods and services do not increase for you.

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