What is CGST and SGST ?
Since GST subsumed both indirect taxes of central government (excise duty, service tax, custom duty etc) and state governments (VAT, Luxury tax etc) now depends on GST for their indirect tax revenue. Therefore the GST rate is composed of two rates, one of CGST and one of SGST. Therefore while making intra state sale (i.e within same state), CGST collected will go to the central government and SGST collected will go the respective state government in which sale is made.
A dealer in Maharashtra sold goods to the consumer worth Rs. 10,000. The GST rate is 18% comprising of CGST rate of 9% and SGST rate of 9%, in such case the dealer collects Rs. 1800 and Rs. 900 will go to the central government and Rs. 900 will go to the Maharashtra government.
What is IGST ?
GST is a consumption based tax i.e the tax should be received by the state in which the goods or service are consumed not by the state in which such goods are manufactured.
IGST is designed to ensure seamless flow of input tax credit from one state to another. It is designed so that a state doesn’t have to deal with every other state to settle the tax amounts and a state has to deal with only centre government.
Therefore if inter state sales (i.e from one state to another state) is made then seller will charge IGST in place of CGST + SGST.
A dealer in Maharashtra sold goods to its dealer in Rajasthan worth Rs. 1,00,000. The GST rate is 18% comprising of CGST rate of 9% and SGST rate of 9%, in such case the dealer has to charge Rs. 18,000 as IGST.
GST has become a gobal standard. The proposed tax system will take the form of “Dual GST” which is Concurrently levied by Central and state level Government. This will Comprise of :
- Central GST (CGST) which will be levied by Central Government
- State GST (SGST) which will be levied by State Government
- Integrated G0ST (IGST) which will be by Central Government on inter-state of Goods and Services
Who will take taxes ?
- For Intra state transactions: In case transactions made with in the state, Seller collects both CGST & SGST from the buyer and CGST needs and CGST needs to be deposited with Central Govt. and SGST with State Govt.
- For Inter state transactions: Integrated goods and service tax (IGST) shall be levied on inter state transactions of goods and services which is based on destination principle. Tax gets transfered to importing state.
How to adjust the credit in GST ?
|Credit of||To be Adjusted with|
|IGST –||IGST, CGST, SGST|
|CGST –||IGST, CGST|
|SGST –||SGST, IGST|