What is GST, CGST, SGST, IGST and UTGST?

The Goods and Service Tax (GST) is levied on goods and services based on their final destination. It is collected and deposited in the state where the end-user or the consumer purchases the goods or services.  The Indian government can collect taxes and gain money from state and central governments. GST is one of India’s most significant tax reforms; Since Independence, it has helped bring uniformity to the indirect taxation structure and eliminated the cascading effect of various taxes levied in the past.

GST reform aims to simplify the taxation process while restructuring India’s USD 2.4 trillion economies. The primary goal was to reach the government’s USD 5 trillion economic targets and develop India into a global economic powerhouse.

What Is the Need for GST?

Before introducing the GST regime, the Central and State governments imposed many taxes.

1. Different state governments followed their own set of tax policies and regulations.

2. The Central Government imposed a central state tax on interstate transactions.

3. Assume that the Indian market is price competitive. In that instance, more international players will enter the market, resulting in more exporters and boosting the Indian Economy.

4. One of the reasons for the necessity for GST was to increase revenue from indirect taxes in the country. GST is simple to comprehend, and a straightforward tax structure will attract more taxpayers, resulting in increased revenue for the Indian government.

There are four types of GST:

1. CGST: CGST is Central Goods and Service Tax. The Central Government is responsible for levying and collecting the CGST. Excise duty, Central Sales Tax, Export Duty, Special Additional Duty, and other previously imposed central taxes have been replaced. CGST is Central Goods and Service Tax.

 2. SGST: The SGST is a tax levied by state governments on intra-state trade and services or trade within the state (State-GST). Because the transaction took place within the state, the state government earned the earnings.

3. UTGST: The Union Territory Goods and Services Tax, or UTGST, is similar to the SGST.  The only distinction is that the tax revenue is transferred to the Treasury to manage the union territory. A significant difference between SGST and UGST is that the union territories directly come under the supervision of the Central government. UT doesn’t have its own elected government like other states. The seven union territories are Lakshadweep, Daman and Diu, Dadra and Nagar Haveli, Andaman and Nicobar Islands, Delhi, & Puducherry.

4. IGST: The Central Government collects the Integrated goods and services tax. However, it is levied by both the Central and State governments. Following the tax collection, the Central Government will distribute the predetermined portion as per the agreement between the central and the respective State Governments. The IGST rate is calculated by adding the CGST and SGST rates together.

 The Goods and Services Tax is a destination-based tax. The introduction of GST as a single tax has simplified the entire procedure. It has significantly reduced the complications by saving time and making the procedure effortless.