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What-is-CGST-SGST-and-IGST

 

What is CGST, SGST and IGST

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See related posts : Introduction about GSTR-1

Introduction-

GST Act was introduced in July 2017, after subsumed Indirect taxes of Central Government (i.e. Central Excise Duty, Custom duty, Additional Excise Duty Special Additional Duty, Central Sales Tax (CST), Service Tax or Surcharge & Cess etc.) or State Government (i.e. VAT, Entry Tax, Purchase Tax, Luxury Tax, Surcharge & Cess etc.). They charged IGST for transactions from one state to another state or CGST & SGST will be charged for transactions with in the same state.

 

The detailed about CGST, SGST & IGST are as under-

CGST

CGST means Central Goods and Service Tax, CGST will be applicable for any transaction of Goods & services with in the same state. For example, when the goods are dispatched from Panchkula (Haryana state) to another person at Ambala (Haryana State) i.e. the same state, CGST or SGST will be charged. If the rate on any item is 18 %, so it will be divided half-half into CGST or SGST, says CGST @9% or SGST@9% will be charged, totaling of both is 18%. Tax collected under CGST will be the revenue for the Central Government.

CGST tax replaces the earlier central taxes i.e. Central Excise Duty, Custom Duty, Additional Excise Duty, Special additional duty (SAD), Central Sales Tax (CST), Service Tax or Surcharge & Cess etc.

 

SGST

SGST means State Goods and Service Tax, SGST will be applicable along with CGST in the same percentage for any transaction of Goods & Services with in the same state. For example, when the goods are dispatched from Panchkula (Haryana state) to another person at Ambala (Haryana State) i.e. the same state, CGST or SGST will be charged. If the rate on any item is 18 %, so it will be divided half-half into CGST or SGST, says CGST @9% or SGST@9% will be charged, totaling of both is 18%. Tax collected under SGST will be the revenue for the State Government.

SGST tax replaces the earlier state taxes i.e. VAT, Entry tax, Purchase Tax, Luxury tax or Surcharge Cess etc.

 

IGST

IGST means Integrated Goods and Service Tax, IGST will be applicable for any transaction of Goods & services from one state to another state. For example, when the goods are dispatched from Panchkula (Haryana state) to another person at Shimla (Himachal State) i.e. not the same state, IGST will be charged. If the rate on any item is 18%, then the IGST will be charged @ 18%. Tax collected under IGST will be the revenue for the Central Government or State Government, it will be divided between the two as the rate specified by the government.

IGST tax replaces the earlier Central Sales Tax.

 

Example 1- (Sale from one State to another State)

If Mr. X transfer the goods of Rs. 50,000 from Amritsar (Punjab) to Mr. Y at Ambala (Haryana), the rate of tax is 18%, what type of tax is charged?

Answer-

Mr. X will be charged IGST on the value of goods, because the goods are transferred from one state to another state. The IGST will be charged @ 18% i.e. Rs. 9,000.

Value of Goods                   Rs. 50,000

IGST @18%                       Rs. 9,000

Total                                   Rs. 59,000

 

Example 2- (Sale within State)

If Mr. X transfer the goods of Rs. 50,000 from Amritsar (Punjab) to Mr. Y at Jallandhar (Punjab), the rate of tax is 18%, what type of tax is charged?

Answer-

Mr. X will be charged CGST or SGST on the value of goods, because the goods are transferred within the same state. The CGST or SGST will be charged @ 9% individually.

Value of Goods                  Rs. 50,000

CGST @ 9%                     Rs. 4,500

SGST @ 9%                     Rs. 4,500      

Total                                 Rs. 59,000


See related posts : Adjustment of Input Tax Credit Under IGST, SGST and CGST.



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