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What is CGST & SGST? Meaning, Differences Explained

What is CGST & SGST? Meaning, Differences Explained

Jan 04, 2024 By LOANMANI.COM 128 Views Category: Financial Insights

CGST and SGST are acronyms that stand for Central Goods and Services Tax (CGST) and State Goods and Services Tax (SGST), respectively. These are two components of the Goods and Services Tax (GST) system implemented in India.

1. CGST (Central Goods and Services Tax):
CGST is a tax levied by the central government on the supply of goods and services within a particular state. The revenue collected through CGST goes to the central government. The CGST rates are determined by the Goods and Services Tax Council, which is a body consisting of representatives from the central and state governments.

2. SGST (State Goods and Services Tax):
SGST is a tax imposed by the state government on the supply of goods and services within a state. The revenue collected through SGST goes to the respective state government. Like CGST, the rates of SGST are also determined by the Goods and Services Tax Council.

Differences between CGST and SGST:

1. Authority: CGST is administered by the central government, while SGST is administered by the state government.

2. Revenue Sharing: The revenue collected through CGST is entirely retained by the central government, whereas the revenue collected through SGST is retained by the state government.

3. Applicability: Both CGST and SGST are applicable on intra-state supplies, i.e., when the supply of goods or services occurs within the same state.

4. Rate Determination: The rates of CGST and SGST are determined by the Goods and Services Tax Council but can vary between the central and state governments. The total GST rate is a combination of CGST and SGST rates.

5. Utilization: The revenue from CGST and SGST is used for different purposes. CGST revenue is utilized by the central government for various expenses and developmental activities at the national level, while SGST revenue is utilized by the respective state governments for state-level expenses and developmental activities.

It's important to note that CGST and SGST are applicable only for intra-state supplies. For inter-state supplies (when goods or services move from one state to another), an Integrated Goods and Services Tax (IGST) is levied, and the revenue is shared between the central and state governments.

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