{"id":2562,"date":"2024-09-16T10:37:46","date_gmt":"2024-09-16T05:07:46","guid":{"rendered":"https:\/\/razorpay.com\/learn\/?p=2562"},"modified":"2025-02-13T09:54:16","modified_gmt":"2025-02-13T04:24:16","slug":"what-is-cgst-sgst-igst","status":"publish","type":"post","link":"https:\/\/razorpay.com\/learn\/what-is-cgst-sgst-igst\/","title":{"rendered":"What is SGST, CGST, IGST &#038; UTGST? Types of GST Explained"},"content":{"rendered":"<div class=\"flex max-w-full flex-col flex-grow\">\n<div class=\"min-h-[20px] text-message flex w-full flex-col items-end gap-2 whitespace-normal break-words [.text-message+&amp;]:mt-5\" dir=\"auto\" data-message-author-role=\"assistant\" data-message-id=\"d39974ad-cefd-49d2-a17f-05a1144281d2\">\n<div class=\"flex w-full flex-col gap-1 empty:hidden first:pt-[3px]\">\n<div class=\"markdown prose w-full break-words dark:prose-invert light\">\n<p>Understanding GST is crucial for navigating India&#8217;s taxation landscape. This article breaks down the four key components of GST\u2014SGST, CGST, IGST, and UTGST\u2014explaining their purposes, applications, and differences to simplify your compliance and accounting processes.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_80 counter-hierarchy ez-toc-counter ez-toc-transparent ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69eb8f53cdcec\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69eb8f53cdcec\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/razorpay.com\/learn\/what-is-cgst-sgst-igst\/#Types-of-GST-SGST-CGST-IGST-and-UTGST\" >Types of GST: SGST, CGST, IGST and UTGST<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/razorpay.com\/learn\/what-is-cgst-sgst-igst\/#1-What-is-SGST\" >1. What is SGST?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/razorpay.com\/learn\/what-is-cgst-sgst-igst\/#2-What-is-CGST\" >2. What is CGST?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/razorpay.com\/learn\/what-is-cgst-sgst-igst\/#3-What-is-IGST\" >3. What is IGST?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/razorpay.com\/learn\/what-is-cgst-sgst-igst\/#4-What-is-UTGST\" >4. What is UTGST?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/razorpay.com\/learn\/what-is-cgst-sgst-igst\/#Key-Difference-Between-CGST-SGST-and-IGST\" >Key Difference Between CGST, SGST, and IGST<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/razorpay.com\/learn\/what-is-cgst-sgst-igst\/#How-Different-Types-of-GST-Are-Applied-in-Transactions\" >How Different Types of GST Are Applied in Transactions<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/razorpay.com\/learn\/what-is-cgst-sgst-igst\/#Understanding-the-Split-Why-SGST-CGST-and-IGST\" >Understanding the Split: Why SGST, CGST, and IGST?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/razorpay.com\/learn\/what-is-cgst-sgst-igst\/#How-Are-Input-Tax-Credits-Adjusted\" >How Are Input Tax Credits Adjusted?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/razorpay.com\/learn\/what-is-cgst-sgst-igst\/#Key-Points-to-Remember-About-GST\" >Key Points to Remember About GST<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/razorpay.com\/learn\/what-is-cgst-sgst-igst\/#Frequently-Asked-Questions\" >Frequently Asked Questions<\/a><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"Types-of-GST-SGST-CGST-IGST-and-UTGST\"><\/span><b>Types of GST: SGST, CGST, IGST and UTGST<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The <\/span><strong><a href=\"https:\/\/razorpay.com\/learn\/gst-goods-and-services-tax-guide\/\">Goods and Services Tax<\/a><\/strong><span style=\"font-weight: 400;\"> (GST) forms the cornerstone of India&#8217;s taxation system. It is divided into four distinct components, each designed for specific types of transactions:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>SGST (State GST):<\/b><span style=\"font-weight: 400;\"> Levied by individual states on transactions within their borders.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>CGST (Central GST):<\/b><span style=\"font-weight: 400;\"> Charged by the central government on intrastate transactions.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>IGST (Integrated GST):<\/b><span style=\"font-weight: 400;\"> Applicable for interstate transactions, ensuring a seamless tax flow between states.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b style=\"font-size: 19px;\">UTGST (Union Territory GST):<\/b><span style=\"font-weight: 400;\"> Similar to SGST, but applies in specific union territories without a legislative assembly.<\/span><\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"1-What-is-SGST\"><\/span><b>1. What is SGST?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">SGST stands for State Goods and Services Tax. It is an indirect tax imposed by state governments on intrastate supplies of goods and services.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">As part of the GST framework, SGST ensures that state governments receive their share of tax revenue for intrastate transactions, contributing to a unified tax system across India.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">SGST replaces earlier state-level taxes such as purchase tax, luxury tax, VAT, and octroi, simplifying the tax system.\u00a0<\/span><\/p>\n<p><b>Related Read: <\/b><a href=\"https:\/\/razorpay.com\/learn\/difference-between-gst-and-vat\/\"><b>Difference Between GST and VAT in India<\/b><\/a><\/p>\n<h3><b>1.1 When is SGST Applicable?<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">SGST applies to transactions involving the sale of goods and services within the same state. For instance, if a clothing store in Maharashtra sells a dress to a customer also in Maharashtra, SGST would be applicable.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In union territories like Chandigarh, Puducherry, and the Andaman and Nicobar Islands, SGST is replaced by Union Territory Goods and Services Tax (UTGST).<\/span><\/p>\n<h3><b>1.2 SGST Example With Calculation<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Let&#8217;s consider a hypothetical scenario to understand the application of State Goods and Services Tax (SGST). Imagine you run a clothing store in Maharashtra and sell a saree worth \u20b910,000 to a customer within the state. The applicable GST rate on sarees is 5%, including CGST and SGST.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In this case, the SGST rate would be 2.5% (half of the total GST rate). Therefore, the SGST amount on the saree would be calculated as follows:<\/span><\/p>\n<p><b>Calculation of SGST:\u00a0<\/b><\/p>\n<p><span style=\"font-weight: 400;\">SGST = (SGST rate\/100) * Sale value<\/span><\/p>\n<p><span style=\"font-weight: 400;\">= 10,000 * (2.5\/100) <\/span><span style=\"font-weight: 400;\">= \u20b9250<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Hence, in this transaction, you would charge \u20b9250 as SGST, which the state government collects.<\/span><\/p>\n<p><b><i>Related Read:<\/i><\/b><a href=\"https:\/\/razorpay.com\/learn\/gst-rates-goods-and-service-tax-rates-slabs\/\"> <b><i>List of Goods and Service Tax GST Rates, Slab &amp; Revision 2024<\/i><\/b><\/a><\/p>\n<h2><span class=\"ez-toc-section\" id=\"2-What-is-CGST\"><\/span><b>2. What is CGST?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">CGST stands for Central Goods and Services Tax. It is an indirect tax levied by the central government on intrastate supplies of goods and services, as outlined in the <a href=\"https:\/\/www.indiacode.nic.in\/handle\/123456789\/15689\" target=\"_blank\" rel=\"noopener\">CGST Act of 2017<\/a>.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Under the GST framework, CGST applies to transactions within a single state. It ensures that the central government receives its share of tax revenue for these intrastate supplies.<\/span><\/p>\n<h3><b>2.1 When is CGST Applicable?<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">CGST applies when a sale of goods or services takes place within the same state. For instance, if a company in Karnataka sells furniture to a customer also in Karnataka, CGST is applicable to that transaction.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">It is charged alongside an equal amount of State Goods and Services Tax (SGST) or Union Territory Goods and Services Tax (UTGST), depending on the region. While CGST is administered by the central government, SGST or UTGST is collected by the respective state or union territory government.<\/span><\/p>\n<h3><b>2.2 CGST Example With Calculation<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">To illustrate the practical application of the Central Goods and Services Tax (CGST), let&#8217;s consider an example<\/span><\/p>\n<p><span style=\"font-weight: 400;\">As a business owner, you sell a product for \u20b910,000. The current GST rate for the product might be 18%, which means a total GST of \u20b91800 (18% of \u20b910,000) needs to be added. For intrastate sales (within the state), CGST and SGST (State GST) are typically half of the total GST rate each (assuming equal rates). So, CGST would be \u20b9900 (9% of \u20b910,000), which is half of \u20b91800.<\/span><\/p>\n<p><strong>Calculation of CGST:\u00a0<\/strong><\/p>\n<p><span style=\"font-weight: 400;\">GST =\u00a0 Value of Goods x GST rate \/ 100<\/span><\/p>\n<p><span style=\"font-weight: 400;\">= \u20b910,000 x 18% \/ 100 <\/span><span style=\"font-weight: 400;\">= \u20b91800<\/span><\/p>\n<p><span style=\"font-weight: 400;\">CGST = Total GST amount \/ 2 (assuming equal CGST and SGST rates)<\/span><\/p>\n<p><span style=\"font-weight: 400;\">= \u20b91800 \/ 2 <\/span><span style=\"font-weight: 400;\">= \u20b9900<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Therefore, the CGST amount levied on this transaction is \u20b9900.<\/span><\/p>\n<p><b><i>Check out<\/i><\/b><a href=\"https:\/\/razorpay.com\/gst-number-search\/\"> <b><i>Razorpay\u2019s GST Verification tool<\/i><\/b><\/a><b><i>, a powerful resource for streamlining GST number verification and searching for Central and State GST jurisdiction.<\/i><\/b><\/p>\n<h2><span class=\"ez-toc-section\" id=\"3-What-is-IGST\"><\/span><b>3. What is IGST?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">IGST stands for Integrated Goods and Services Tax. It is a tax levied on interstate supply of goods and services, governed by the <a href=\"https:\/\/cbic-gst.gov.in\/aces\/Documents\/IGST-bill-e.pdf\" target=\"_blank\" rel=\"noopener\">IGST Act of 2017<\/a>. IGST is collected by the central government and plays a crucial role in simplifying interstate trade across India.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Unlike intrastate transactions where both CGST and SGST\/UTGST are applied, IGST consolidates these into a single tax for goods and services moving between states or union territories. Essentially, it combines the tax share of both the central and state governments into one streamlined levy.<\/span><\/p>\n<h3><b>3.1 When is IGST Applicable?<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">IGST applies when a sale takes place between different states. For example, if a company in Delhi ships clothes to a customer in Maharashtra, IGST is applicable.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The central government collects IGST, and the revenue is distributed between the central and state governments involved in the transaction.<\/span><\/p>\n<h3><b>3.2 IGST Example With Calculation<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">In this scenario, as a business owner in Delhi, when you sell goods worth \u20b910,000 to a customer in Maharashtra, the Integrated Goods and Services Tax (IGST) will be applicable at 18% per the GST regulations.<\/span><\/p>\n<p><b>Calculation of IGST:<\/b><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">IGST = (Value of Goods) x (IGST Rate\/100)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">= \u20b910,000 x (18\/100)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">= \u20b91,800<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Therefore, the IGST amount levied on this interstate transaction is \u20b91,800.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The collected IGST of \u20b91,800 by the central government is then divided, with \u20b9900 going to the central government and \u20b9900 to the receiving state (Delhi).<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"4-What-is-UTGST\"><\/span><b>4. What is UTGST?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">UTGST stands for Union Territory Goods and Services Tax. It is a tax levied on the supply of goods and services within Union Territories (UTs) in India. UTGST functions similarly to SGST, but it applies specifically within UTs instead of states.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">UTGST is a component of India&#8217;s GST system and applies to Union Territories like Chandigarh, Dadra and Nagar Haveli, Daman and Diu, Lakshadweep, and the Andaman and Nicobar Islands. It follows the GST framework but has unique provisions for administration and collection.<\/span><\/p>\n<h3><b>4.1 When is UTGST Applicable?<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">UTGST applies when goods or services are supplied within a Union Territory that does not have its own legislative assembly. For example, transactions occurring in Chandigarh or Lakshadweep would be subject to UTGST.<\/span><\/p>\n<h3><b>4.2 Example for UTGST with calculation<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Suppose you are a business owner in Chandigarh and sell goods for \u20b915,000. The GST rate is 12%, with UTGST applicable at 6%.\u00a0<\/span><\/p>\n<p><strong>Calculation of UTGST:\u00a0<\/strong><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">UTGST = (Value of Goods) x (UTGST Rate\/100)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">= \u20b915,000 x (6\/100)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">= \u20b9900<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Therefore, the UTGST amount levied on this transaction is \u20b9900.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Key-Difference-Between-CGST-SGST-and-IGST\"><\/span><b>Key Difference Between CGST, SGST, and IGST<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Let\u2019s discuss the key difference between IGST, CGST, and SGST:<\/span><\/p>\n<table>\n<tbody>\n<tr>\n<td>\n<h3><strong>Feature<\/strong><\/h3>\n<\/td>\n<td>\n<h3><strong>CGST (Central Goods &amp; Services Tax)<\/strong><\/h3>\n<\/td>\n<td>\n<h3><strong>SGST (State Goods &amp; Services Tax)<\/strong><\/h3>\n<\/td>\n<td>\n<h3><strong>IGST (Integrated Goods &amp; Services Tax)<\/strong><\/h3>\n<\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Nature<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Central Government Tax<\/span><\/td>\n<td><span style=\"font-weight: 400;\">State Government Tax<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Central Government Tax<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Applicability<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Intrastate transactions (within a state)<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Intrastate transactions (within a state)<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Interstate transactions (between states)<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Collection<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Collected by Central Government<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Collected by the respective State Government<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Collected by Central Government<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Purpose<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Generates revenue for the Central Government<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Generates revenue for the respective State Government<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Facilitates seamless trade and revenue sharing between Central &amp; State Governments<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Example<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Sale of goods from a store in Delhi to a customer in Delhi<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Sale of services by a company in Mumbai to a client in Mumbai<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Sale of goods from a factory in Haryana to a distributor in Karnataka<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h2><span class=\"ez-toc-section\" id=\"How-Different-Types-of-GST-Are-Applied-in-Transactions\"><\/span><b>How Different Types of GST Are Applied in Transactions<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<table>\n<tbody>\n<tr>\n<td>\n<h3><strong>Scenario<\/strong><\/h3>\n<\/td>\n<td>\n<h3><strong>Applicable GST<\/strong><\/h3>\n<\/td>\n<td>\n<h3><strong>Split or Rate<\/strong><\/h3>\n<\/td>\n<td>\n<h3><strong>Reason<\/strong><\/h3>\n<\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Seller &amp; Buyer in Same State (e.g., Maharashtra)<\/span><\/td>\n<td><span style=\"font-weight: 400;\">SGST &amp; CGST<\/span><\/td>\n<td><span style=\"font-weight: 400;\">9% each (if total GST rate is 18%)<\/span><\/td>\n<td rowspan=\"2\"><span style=\"font-weight: 400;\">Divided between state and central government<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Example: Seller in Maharashtra sells to a buyer in Maharashtra (Rs. 10,000)<\/span><\/td>\n<td><span style=\"font-weight: 400;\">&#8211; SGST: Rs. 900 &#8211; CGST: Rs. 900<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Total GST: Rs. 1,800<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Seller &amp; Buyer in Different States (e.g., Maharashtra to Karnataka)<\/span><\/td>\n<td><span style=\"font-weight: 400;\">IGST<\/span><\/td>\n<td><span style=\"font-weight: 400;\">18% (if total GST rate is 18%)<\/span><\/td>\n<td rowspan=\"2\"><span style=\"font-weight: 400;\">Simplifies interstate trade by collecting a single tax<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Example: Seller in Maharashtra sells to a buyer in Karnataka (Rs. 10,000)<\/span><\/td>\n<td><span style=\"font-weight: 400;\">IGST: Rs. 1,800<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Total GST: Rs. 1,800<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h3><b>Additional Factors:<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">While the location of supplier and recipient is primary, the nature of the transaction and specific goods\/services involved might influence the GST component in rare cases. Refer to government-issued GST rules for such specific situations.<\/span><\/p>\n<h3><b>Verifying GST Applicability:<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Businesses and individuals can utilize their<\/span><a href=\"https:\/\/razorpay.com\/learn\/what-is-gstin-all-you-know-about-your-15-digits-gstin\/\"> <b>GST Identification Number<\/b><\/a><b> (GSTIN)<\/b><span style=\"font-weight: 400;\"> to confirm the applicable GST component for their transactions. Additionally, government-provided<\/span><a href=\"https:\/\/razorpay.com\/learn\/gst-rules-benefits-startups-india\/\"> <span style=\"font-weight: 400;\">GST guidelines<\/span><\/a><span style=\"font-weight: 400;\"> offer further clarification.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Understanding-the-Split-Why-SGST-CGST-and-IGST\"><\/span><b>Understanding the Split: Why SGST, CGST, and IGST?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">India&#8217;s GST system utilizes SGST, CGST, and IGST for a reason:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>SGST (State GST):<\/b><span style=\"font-weight: 400;\"> Lets state governments to collect tax on intrastate transactions (within a state), promoting fiscal autonomy.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>CGST (Central GST):<\/b><span style=\"font-weight: 400;\"> Provides central control with a consistent tax component across all states.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>IGST (Integrated GST):<\/b><span style=\"font-weight: 400;\"> Simplifies interstate trade (between states) with a unified tax structure, facilitating seamless movement of goods and services.<\/span><\/li>\n<\/ul>\n<h3><b>Benefits of the GST Split System<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Enhanced Revenue Sharing:<\/b><span style=\"font-weight: 400;\"> The clear division ensures a fair distribution of tax revenue between the central and state governments.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Streamlined Tax Administration:<\/b><span style=\"font-weight: 400;\"> It simplifies compliance for businesses operating both within and across states, minimizing administrative burdens.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Reduced Tax Cascading:<\/b><span style=\"font-weight: 400;\"> The GST system, through separate taxes, aims to eliminate the &#8220;tax on tax&#8221; effect, leading to a more efficient tax structure.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b style=\"font-size: 19px;\">Improved Business Environment:<\/b><span style=\"font-weight: 400;\"> A unified and predictable tax framework fosters a more business-friendly climate, encouraging economic activity across India.<\/span><\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"How-Are-Input-Tax-Credits-Adjusted\"><\/span><b>How Are Input Tax Credits Adjusted?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\"><a href=\"https:\/\/razorpay.com\/learn\/input-tax-credit-under-gst\/\">Input Tax Credit (ITC)<\/a> allows businesses to reduce the GST paid on purchases from their GST liability arising from the sales of goods and services. The rules for claiming ITC under GST are:<\/span><\/p>\n<ol>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>To Pay IGST<\/b><span style=\"font-weight: 400;\">: First, use IGST credit, followed by CGST or SGST as per the taxpayer\u2019s preference.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>To Pay CGST<\/b><span style=\"font-weight: 400;\">: Start with CGST credit, then use IGST credit.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>To Pay SGST<\/b><span style=\"font-weight: 400;\">: Use SGST credit first, followed by IGST credit.<\/span><\/li>\n<\/ol>\n<h3><b>Example of ITC Adjustment<\/b><\/h3>\n<p><strong>Assume:<\/strong><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Manufacturer A in Maharashtra sells goods worth INR 10,000 to dealer B in Maharashtra.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Dealer B resells the goods to dealer C in Gujarat for INR 15,000.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Dealer C sells the goods to an end-user in Gujarat for INR 30,000.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">GST rates: 9% CGST, 9% SGST (intrastate), 18% IGST (interstate).<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Here\u2019s how the tax collection and ITC adjustment work:<\/span><\/p>\n<table>\n<tbody>\n<tr>\n<td><b>Step<\/b><\/td>\n<td><b>Description<\/b><\/td>\n<td><b>Maharashtra<\/b><\/td>\n<td><b>Gujarat<\/b><\/td>\n<td><b>Central Government<\/b><\/td>\n<\/tr>\n<tr>\n<td><strong>Step 1<\/strong><\/td>\n<td><span style=\"font-weight: 400;\">Goods of INR 10,000 from A to B<\/span><\/td>\n<td><span style=\"font-weight: 400;\">10,000 * SGST @ 9% = INR 900<\/span><\/td>\n<td><\/td>\n<td><span style=\"font-weight: 400;\">10,000 * CGST @ 9% = INR 900<\/span><\/td>\n<\/tr>\n<tr>\n<td><strong>Step 2<\/strong><\/td>\n<td><span style=\"font-weight: 400;\">Goods of INR 15,000 from B to C<\/span><\/td>\n<td><\/td>\n<td><span style=\"font-weight: 400;\">15,000 * IGST @ 18% = INR 2,700<\/span><\/td>\n<td><span style=\"font-weight: 400;\">(-) CGST credit = INR 900<\/span><\/p>\n<p><span style=\"font-weight: 400;\">(-) SGST credit = INR 900<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Net tax payable = INR 900<\/span><\/td>\n<\/tr>\n<tr>\n<td><strong>Step 3<\/strong><\/td>\n<td><span style=\"font-weight: 400;\">Goods of INR 30,000 from C to D<\/span><\/td>\n<td><\/td>\n<td><span style=\"font-weight: 400;\">30,000 * SGST @ 9% = INR 2,700<\/span><\/td>\n<td><span style=\"font-weight: 400;\">(-) IGST credit = INR 2,700<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Net payable = NIL<\/span><\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><span style=\"font-weight: 400;\">30,000 * CGST @ 9% = INR 2,700<\/span><\/td>\n<td><span style=\"font-weight: 400;\">(-) IGST credit = INR 2,700<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Net payable = NIL<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><b>Summary:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Maharashtra:<\/b><span style=\"font-weight: 400;\"> Final tax payable = NIL<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Gujarat:<\/b><span style=\"font-weight: 400;\"> Final tax payable = INR 2,700<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Central Government:<\/b><span style=\"font-weight: 400;\"> Final tax payable = INR 2,700<\/span><\/li>\n<\/ul>\n<p><b>Adjustment:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Maharashtra&#8217;s INR 900 is adjusted and transferred to the Central Government.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Gujarat receives INR 2,700 as the final payable amount.<\/span><\/li>\n<\/ul>\n<p data-sourcepos=\"14:1-14:224\"><span style=\"font-weight: 400;\">You will have to issue GST-compliant invoices to pass on the credit for the taxes paid. The invoice should include the necessary details such as name, address, GSTIN of the supplier and the recipient of goods,<\/span><a href=\"https:\/\/razorpay.com\/learn\/hsn-sac-codes-gst\/\"><span style=\"font-weight: 400;\"> HSN codes<\/span><\/a><span style=\"font-weight: 400;\"> of the goods supplied, and so on. And if you want to know how to generate a GST invoice, refer to our<\/span><a href=\"https:\/\/razorpay.com\/learn\/gst-invoice-online-india\/\"><span style=\"font-weight: 400;\"> GST invoice guide<\/span><\/a><span style=\"font-weight: 400;\"> and create GST-compliant invoices using<\/span><a href=\"https:\/\/razorpay.com\/invoices\/\"> <span style=\"font-weight: 400;\">Razorpay Invoices<\/span><\/a><span style=\"font-weight: 400;\">. <\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Key-Points-to-Remember-About-GST\"><\/span>Key Points to Remember About GST<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ul>\n<li><strong>Unified Tax System:<\/strong> GST integrates multiple indirect taxes into a single tax system, simplifying the taxation process.<\/li>\n<li><strong>Intrastate vs. Interstate:<\/strong> SGST and CGST apply to intrastate transactions, while IGST applies to interstate transactions.<\/li>\n<li><strong>Tax Credits:<\/strong> Input Tax Credit (ITC) allows businesses to offset GST paid on purchases against GST liability on sales, reducing overall tax burden.<\/li>\n<li><strong>Compliance:<\/strong> Businesses must be registered under GST if their turnover exceeds the prescribed threshold limit, and they must comply with periodic filing and payment requirements.<\/li>\n<li><strong>Invoice Requirements:<\/strong> GST-compliant invoices must include details like GSTIN, HSN codes, and the tax amounts (CGST, SGST, IGST).<\/li>\n<li><strong>Digital Filing:<\/strong> GST returns and payments are processed through the GST portal, requiring businesses to maintain digital records.<\/li>\n<li><strong>Revenue Sharing:<\/strong> Revenue from CGST and SGST is retained by the central and state governments, respectively, while IGST revenue is shared between both.<\/li>\n<li><strong>Penalties:<\/strong> Non-compliance with GST regulations, including incorrect filing or failure to pay taxes, can result in penalties and legal consequences.<\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"Frequently-Asked-Questions\"><\/span><b>Frequently Asked Questions<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3><b>1. What is the full form of CGST?<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">CGST stands for Central Goods and Services Tax.<\/span><\/p>\n<h3><b>2. What is the full form of SGST?<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">SGST means State Goods and Services Tax.<\/span><\/p>\n<h3><b>3. What is the full form of UGST?<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">UGST stands for Union Territory Goods and Services Tax.<\/span><\/p>\n<h3><b>4. What is the full form of IGST?<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">IGST stands for Integrated Goods and Services Tax.<\/span><\/p>\n<h3><b>5. How is IGST Adjusted Against CGST and SGST?<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">IGST is first used to offset IGST liability. Any remaining credit is applied to CGST, and if there&#8217;s still leftover credit, it can be used to offset SGST or UTGST.<\/span><\/p>\n<h3><b>6. What taxes are levied on an intra-state supply?<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">For intra-state supplies (transactions within the same state), the following taxes are levied:<\/span><\/p>\n<ol>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">CGST (Central Goods and Services Tax): Charged by the central government.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">SGST (State Goods and Services Tax): Charged by the state government.<\/span><\/li>\n<\/ol>\n<h3><b>7. How many types of SGST are there?<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">There is only one form of SGST, which represents State Goods and Services Tax.<\/span><\/p>\n<h3><b>8. How many UTGST are there in India?\u00a0<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">India has only one form of UTGST implemented in the country&#8217;s union territories.<\/span><\/p>\n<h3><b>9. What types of transactions are subject to UTGST?<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">UTGST applies to supplies of goods and services within Union Territories of India, such as Chandigarh and Puducherry.<\/span><\/p>\n<h3><b>10. Can IGST be adjusted against future CGST or SGST liabilities?<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Yes, IGST can be adjusted against future CGST and SGST liabilities. Businesses can claim a credit for IGST paid on inputs or purchases against their CGST and SGST liabilities for intra-state transactions.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>What determines if CGST, SGST or IGST is applicable? What is Central Goods and Services Tax (CGST) and State Goods and Services Tax (SGST)? Read to know.<\/p>\n","protected":false},"author":151156469,"featured_media":2564,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3435],"tags":[3407,2039,3409,3408,3801],"class_list":{"0":"post-2562","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-gst-tax-government","8":"tag-cgst","9":"tag-gst","10":"tag-igst","11":"tag-sgst","12":"tag-utgst"},"_links":{"self":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts\/2562","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/users\/151156469"}],"replies":[{"embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/comments?post=2562"}],"version-history":[{"count":32,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts\/2562\/revisions"}],"predecessor-version":[{"id":15776,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts\/2562\/revisions\/15776"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/media\/2564"}],"wp:attachment":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/media?parent=2562"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/categories?post=2562"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/tags?post=2562"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}