The term Levy refers to the legal authority of the government to impose and collect Goods and Services Tax (GST) on the supply of goods and services. The levy of GST is governed by Section 9 of the Central Goods and Services Tax (CGST) Act, 2017, Section 5 of the Integrated Goods and Services Tax (IGST) Act, 2017, and the corresponding State GST (SGST) Acts. GST is levied on all taxable supplies of goods and services made for a consideration in the course or furtherance of business, except those specifically exempt under the law. The levy applies at the time of supply and is based on the value of the transaction. It provides the legal framework for the imposition and collection of GST across India.
Types of Levy under GST:
1. Central Goods and Services Tax (CGST)
Central Goods and Services Tax (CGST) is levied by the Central Government on the intra state supply of goods and services under Section 9 of the CGST Act, 2017. It is applicable when the supplier and the place of supply are located in the same state or Union Territory. CGST is collected along with State GST (SGST) or Union Territory GST (UTGST), and both are charged equally on the taxable value. The revenue collected under CGST belongs to the Central Government. Businesses can claim Input Tax Credit (ITC) of CGST against their eligible CGST and IGST liabilities, subject to prescribed conditions.
2. State Goods and Services Tax (SGST)
State Goods and Services Tax (SGST) is levied by the respective State Government on intra state supplies of goods and services under the State GST Act. SGST is charged together with CGST on the same taxable transaction, with both taxes generally levied at equal rates. The revenue collected from SGST is retained by the respective State Government where the supply takes place. Registered taxpayers can claim Input Tax Credit of SGST against eligible SGST and IGST liabilities according to the provisions of the GST law. SGST ensures that states receive their share of revenue from taxable supplies within their jurisdiction.
3. Union Territory Goods and Services Tax (UTGST)
Union Territory Goods and Services Tax (UTGST) is levied on the intra state supply of goods and services in Union Territories that do not have a legislature, such as Chandigarh, Lakshadweep, Dadra and Nagar Haveli and Daman and Diu, Andaman and Nicobar Islands, and Ladakh. It is governed by the UTGST Act, 2017. UTGST is charged along with CGST in place of SGST. The revenue collected under UTGST belongs to the concerned Union Territory administration. Registered persons may claim Input Tax Credit of UTGST according to the provisions of the GST law.
4. Integrated Goods and Services Tax (IGST)
Integrated Goods and Services Tax (IGST) is levied by the Central Government under Section 5 of the IGST Act, 2017 on inter state supplies of goods and services, imports, exports (where applicable), and supplies made to or from Special Economic Zones (SEZs). Instead of charging CGST and SGST separately, a single IGST is charged on the transaction. The Central Government collects IGST and later distributes the appropriate share to the destination state where the goods or services are consumed. The IGST mechanism facilitates seamless interstate trade and enables uninterrupted flow of Input Tax Credit across states.
Charges under GST:
The term charges under GST refers to the amount of tax payable on the taxable supply of goods and services as prescribed under the GST laws. Depending on the nature and place of supply, GST is charged as Central GST (CGST), State GST (SGST), Union Territory GST (UTGST), or Integrated GST (IGST). For intra state supplies, CGST and SGST or UTGST are charged simultaneously, while IGST is charged on inter state supplies, imports, and specified transactions. GST is calculated on the value of supply at the applicable tax rate. The tax collected by the supplier is deposited with the government in accordance with the provisions of the GST Acts and Rules.
1. Central Goods and Services Tax (CGST) Charge
Central Goods and Services Tax (CGST) is charged by the Central Government on the intra state supply of taxable goods and services under Section 9 of the CGST Act, 2017. It is collected together with State Goods and Services Tax (SGST) or Union Territory Goods and Services Tax (UTGST). The CGST rate is generally equal to the SGST or UTGST rate, and both together constitute the total GST payable on an intra state transaction. The tax collected under CGST is credited to the Central Government. Registered taxpayers may claim Input Tax Credit (ITC) of CGST against eligible CGST and IGST liabilities, subject to the provisions of the GST law.
2. State Goods and Services Tax (SGST) Charge
State Goods and Services Tax (SGST) is charged by the respective State Government on the intra state supply of taxable goods and services. It is levied under the State GST Act and is collected simultaneously with CGST. The SGST rate is generally equal to the CGST rate, ensuring that the total GST burden is shared equally between the Central and State Governments. The revenue collected from SGST belongs to the state where the supply takes place. Registered persons are entitled to claim Input Tax Credit of SGST against eligible SGST and IGST liabilities in accordance with the provisions of the GST law.
3. Union Territory Goods and Services Tax (UTGST) Charge
Union Territory Goods and Services Tax (UTGST) is charged on the intra state supply of taxable goods and services in Union Territories that do not have a legislature. It is levied under the UTGST Act, 2017 and is collected along with CGST instead of SGST. The UTGST rate is generally equal to the CGST rate, together forming the total GST payable on the transaction. The revenue collected under UTGST belongs to the concerned Union Territory administration. Registered taxpayers can claim Input Tax Credit of UTGST against eligible UTGST and IGST liabilities, subject to the conditions prescribed under the GST law.
4. Integrated Goods and Services Tax (IGST) Charge
Integrated Goods and Services Tax (IGST) is charged by the Central Government on inter state supplies of goods and services, imports, and supplies involving Special Economic Zones (SEZs) under Section 5 of the IGST Act, 2017. A single IGST is levied instead of charging CGST and SGST separately. The tax is collected by the Central Government and later apportioned between the Centre and the destination State or Union Territory where the goods or services are consumed. Registered taxpayers may claim Input Tax Credit of IGST against eligible IGST, CGST, and SGST or UTGST liabilities, subject to the provisions of the GST law.
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