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Difference Between CGST, SGST and IGST

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Difference Between CGST, SGST and IGST

GST is a landmark tax reform which must happen soon. The mammoth tax reform will club all indirect taxes into one single tax. That ways all types of indirect taxes, be it central or state, large or small, will come under the purview of one single tax. This much needed change is expected to arrive from 1st July, 2017 onwards. Since GST will club all central as well as  state taxes, there is bound to be some confusion. Listening  to Difference Between CGST, SGST and IGST. To ensure there is smooth transition there will be three components of Goods and Service Tax. They are:

  • Central GST (CGST)
  • State GST (SGST)
  • Integrated GST (IGST)

Central GST

CGST will cover all those taxes that are levied and collected by the Central Government like, Customs duty, Excise, Service Tax etc. The applicability of CGST will be within the state. Since the tax is collected by the Centre its input credit can only be claimed against CGST and IGST. Not against SGST. Under CGST you can also avail the benefit of composition scheme up to a turnover of ₹50 lacs. Finally, you won't need to register yourself if your annual turnover is less than ₹20 lacs. 

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State GST

State GST on the other hand is levied and collected by State like, VAT, professional tax, entry tax etc. It is applicable within the state and you only need to register under SGST if your annual turnover exceeds ₹20 lacs. The input credit of SGST can be claimed only against IGST and SGST. Taxpayers can also avail the benefit of composite scheme up to a turnover of ₹50 lacs.

IGST

Integrated GST is a component that covers inter state sales, like central sales tax etc. It covers all other taxes that ain't covered under CGST and SGST. It is levied by Central Government and has features of both CGST and SGST. The credit of IGST can be adjusted against all three components, viz. CGST, SGST and IGST. Unlike Central and State GST, there is no exemption limit in IGST. Plus there is no composite scheme available. You also need to mandatorily register under GST in case of inter-state sales.

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