Differences between CGST, SGST and IGST?
Central Goods and Services Tax (CGST), State Goods and Services Tax (SGST), and Integrated Goods and Services Tax (IGST) are components of the Goods and Services Tax (GST) system in India. They are levied on the supply of goods and services but have different scopes and applications. Here are the key differences between CGST, SGST, and IGST:
1. Jurisdiction:
– CGST (Central Goods and Services Tax):
Collected by the Central Government, and it is applicable on intra-state supplies (transactions within a state).
– SGST (State Goods and Services Tax):
Collected by the State Government, and it is applicable on intra-state supplies. The rate is generally equal to the CGST rate.
– IGST (Integrated Goods and Services Tax):
Collected by the Central Government, and it is applicable on inter-state supplies (transactions between states).
2. Applicability:
– CGST and SGST:
Applied on transactions within the same state, and the revenue is shared between the Central and State Governments.
– IGST:
Applied on transactions between different states or Union Territories (UTs). The tax collected is later apportioned between the center and the concerned state or UT.
3. Rate Structure:
– CGST and SGST:
The rates may vary for CGST and SGST, but their combined rate (CGST + SGST) equals the total GST rate on intra-state supplies.
– IGST:
The rate of IGST is generally equal to the total GST rate applicable on the same goods or services for intra-state supplies.
4. Input Tax Credit (ITC):
– CGST and SGST:
Businesses can claim Input Tax Credit against the respective CGST and SGST liabilities for intra-state transactions.
– IGST:
Businesses can claim ITC against both CGST and SGST liabilities as IGST replaces both these taxes for inter-state transactions.
5. Payment to Respective Governments:
– CGST:
Collected by the Central Government.
– SGST:
Collected by the State Government.
– IGST:
Collected by the Central Government but distributed between the Central and State Governments.
6. Invoice Format:
– CGST and SGST:
Mentioned separately on invoices for intra-state supplies.
– IGST:
Mentioned as a single tax (IGST) on invoices for inter-state supplies.
7. Use in Import and Export:
– CGST and SGST:
Not applicable to import/export transactions.
– IGST:
Applied on import transactions, and export transactions are considered as zero-rated.
Understanding these differences is crucial for businesses to comply with the GST framework and calculate their tax liabilities accurately. Businesses often need to account for CGST, SGST, and IGST based on the nature and location of their transactions. It’s advisable for businesses to seek professional advicelike LEGATO BUSINESS SOLUTIONJ LLP to ensure proper compliance with GST regulations.