Goods and Services Tax (GST) is a comprehensive indirect tax that has replaced multiple taxes in India. It is levied on the supply of goods and services, and it has simplified the tax structure in the country. GST is divided into three categories – CGST, SGST, and IGST. Let’s understand these concepts in detail.
CGST
CGST stands for Central Goods and Services Tax. It is a tax that is levied by the Central Government on the supply of goods and services within a state. The tax revenue collected from CGST is distributed between the Central and State Governments. The CGST is levied on the basis of the Central GST Act, 2017, which is applicable throughout India.
SGST
SGST stands for State Goods and Services Tax. It is a tax that is levied by the State Government on the supply of goods and services within the state. The tax revenue collected from SGST is entirely received by the State Government. The SGST is levied on the basis of the State GST Act, 2017, which is applicable only within the state.
IGST
IGST stands for Integrated Goods and Services Tax. It is a tax that is levied on the supply of goods and services between states in India. IGST is levied by the Central Government, but the revenue collected from IGST is distributed between the Central and State Governments. The IGST is levied on the basis of the Integrated GST Act, 2017.
Applicability of CGST, SGST, and IGST
The applicability of CGST, SGST, and IGST depends on the nature of the supply of goods and services. If the supply is intra-state, i.e., within a state, both CGST and SGST are applicable. If the supply is inter-state, i.e., between states, IGST is applicable.
For example, if a business in Delhi supplies goods to a business in Mumbai, the business in Delhi will charge IGST, and the revenue collected will be distributed between the Central and State Governments. If the same business supplies goods to another business in Delhi, the business will charge CGST and SGST, and the revenue collected will be distributed between the Central and Delhi State Governments.
Conclusion
In conclusion, the CGST, SGST, and IGST concepts are crucial for understanding the GST framework in India. The CGST is a tax levied by the Central Government on intra-state supplies, while the SGST is a tax levied by the State Government on intra-state supplies. The IGST is a tax levied by the Central Government on inter-state supplies. These taxes have simplified the tax structure in India and have made it easier for businesses to operate across the country. With the implementation of GST, the Indian taxation system has undergone a significant change, which has resulted in a more organized and transparent economy.