Last updated: February 4th, 2020 2:42 PM

Guide to CGST, SGST and IGST

CGST, SGST, and IGST apply to the interstate and intra-state supply of goods and services. GST acts as a destination tax. Hence, the tax base shifts from origin to consumption. The imports or end-use shall hold the responsibility to tax and exports, or the taxation may not apply to the production. Under the present regulation, on a taxable event, multiple tax liabilities may apply such as central excise, in case of manufacturing, service tax in case of sale of service and State VAT in case of sale of goods. Hence to ease the taxation process for the taxpayers, GST shall shift from multiple taxes to a single taxable event.

Inter-State vs Intra-State

To understand the concepts of CGST, SGST and IGST, it is first important to understand the concept of inter-state vs intrastate supply of goods and service, under GST. As in every taxable transaction, it is important to distinguish between inter-state vs intra-state supply to determine if CGST or SGST or IGST would be applicable. To determine if a supply is inter-state or intra-state, the location of the supplier and the place of supply must first be determined.

Inter-State Supply

Inter-State supply of goods or service is one where the location of supplier of goods/service and place of supply are in different states. In addition, the inter-state supply applies to the following:

• The supply of goods or service by an SEZ developer or SEZ unit,
• During the course of import of goods or service,
• Supply when the supplier operates in India,
• The place of supply operates outside India (export) and

The taxpayer shall treat other supply not covered under intra-state as inter-state supply.

Intra-State Supply

An intra-state supply of goods or service applies when the place of supply operates in the same state as the location of the supplier. Intra-state supply does not include the supply of goods/service to SEZ units or developers, imports or exports.

How is GST Levied?

Both the Central Government and the State Government levy GST for the supply of goods and services. The power to tax on supply of goods and services would also be vested in the hands of both, the State and Central Government. However, in case of inter-state supply, the power to tax would be vested with the Central Government, while the revenue of the final transaction would be transferred to the State and the Union similar to the intra-state transaction. The following model shows how GST is levied in India broadly: Illustration- How GST is Levied?

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