CGST, SGST, and IGST are different types of Goods and Services Tax (GST) that are levied in India.
CGST (Central Goods and Services Tax) is a tax levied by the Central Government on the supply of goods and services within a state. It is collected by the Central Government and is applicable on all transactions within a state. The revenue generated from CGST is shared between the Central and State governments, with the Central Government retaining a portion of the tax.
SGST (State Goods and Services Tax) is a tax levied by the State Government on the supply of goods and services within a state. It is collected by the State Government and is applicable on all transactions within a state. The revenue generated from SGST is retained by the State Government.
IGST (Integrated Goods and Services Tax) is a tax levied by the Central Government on the supply of goods and services between two different states or between a state and a Union Territory. It is collected by the Central Government and is applicable on all inter-state transactions. The revenue generated from IGST is shared between the Central and State governments, with the destination state receiving a portion of the tax.
In summary, CGST and SGST are levied on intra-state transactions, while IGST is levied on inter-state transactions. The revenue generated from CGST and IGST is shared between the Central and State governments, while the revenue generated from SGST is retained by the State Government.
Example
Suppose a manufacturer in Maharashtra sells goods worth Rs. 10,000 to a buyer in Gujarat. In this case, the transaction will attract IGST, which will be levied by the Central Government.
If the GST rate applicable to the goods is 18%, then the IGST charged on the transaction will be Rs. 1,800. The Central Government will retain a portion of this tax, and the remaining amount will be credited to the account of the Gujarat Government, as the goods are being sold to a buyer in Gujarat.
Now, let’s take another example where the same manufacturer sells goods worth Rs. 10,000 to a buyer in Maharashtra itself. In this case, the transaction will attract CGST and SGST.
If the GST rate applicable to the goods is 18%, then the CGST and SGST charged on the transaction will be Rs. 900 each. The Central Government will retain the CGST portion of the tax, and the remaining amount of SGST will be credited to the account of the Maharashtra Government, as the transaction is taking place within the state of Maharashtra.
So, in summary, if a transaction takes place within a state, both CGST and SGST are levied, and the revenue generated from these taxes is shared between the Central and State governments. On the other hand, if a transaction takes place between two different states or between a state and a Union Territory, IGST is levied, and the revenue generated from this tax is shared between the Central and destination state/UT governments.
