by Under the GST regime, there are three types of taxes: Central Goods and Services Tax (CGST), State Goods and Services Tax (SGST)/ Union Territory Goods and Services Tax (UTGST), and Integrated Goods and Services Tax (IGST). These taxes are levied on the supply of goods or services based on their place of supply.
Central Goods and Services Tax (CGST):
CGST is the tax levied by the central government on the intra-state supply of goods or services. It is governed by the Central Goods and Services Tax Act, 2017.
Under CGST, the central government collects tax on all transactions that take place within a state, irrespective of the type of supply (i.e., intra-state supply of goods or services). The revenue collected from CGST is used to fund the central government’s expenses and is distributed among the states as per the recommendations of the GST Council.
For example, if a trader in Delhi sells goods to another trader in Delhi, CGST will be charged on the transaction, and the revenue collected will be deposited with the central government.
State Goods and Services Tax (SGST) / Union Territory Goods and Services Tax (UTGST):
SGST/UTGST is the tax levied by the state government or union territory government on the intra-state supply of goods or services. It is governed by the State Goods and Services Tax Act, 2017.
Under SGST/UTGST, the state or union territory government collects tax on all transactions that take place within the state or union territory, irrespective of the type of supply. The revenue collected from SGST/UTGST is used to fund the state or union territory government’s expenses.
For example, if a trader in Gujarat sells goods to another trader in Gujarat, SGST will be charged on the transaction, and the revenue collected will be deposited with the government of Gujarat.
Integrated Goods and Services Tax (IGST):
IGST is the tax levied by the central government on the inter-state supply of goods or services. It is governed by the Integrated Goods and Services Tax Act, 2017.
Under IGST, the central government collects tax on all transactions that take place between two different states or union territories. The revenue collected from IGST is then distributed among the states and union territories as per the recommendations of the GST Council.
For example, if a manufacturer in Maharashtra supplies goods worth Rs. 1 lakh to a trader in Gujarat, IGST will be charged on the transaction. The applicable IGST rate will be 18% (CGST rate of 9% + SGST rate of 9%), and the IGST amount charged will be Rs. 18,000. The revenue collected from IGST will be deposited with the central government, and then distributed among the states and union territories as per the recommendations of the GST Council.
Example table that shows how CGST, SGST/UTGST, and IGST are applied based on the place of supply:
| Transaction | Place of supply | Type of GST | GST Rate | GST Amount |
| Trader in Delhi sells goods to another trader in Delhi | Within a state | CGST + SGST | 9% each | 18% |
| Trader in Gujarat sells goods to another trader in Gujarat | Within a state | CGST + SGST | 9% each | 18% |
| Manufacturer in Maharashtra supplies goods worth Rs. 1 lakh to a trader in Gujarat | Inter-state | IGST | 18% | Rs. 18,000 |
