Confused by the difference between CGST, SGST, and IGST in India?
Learn more about the different GST rates, rules, and requirements. And get a practical insight into how EOTRACE can help you with commodities, a calculator, and the Financial Supply Chain Fund for accurate overseas trading.
What are CGST, SGST, and IGST?
IGST, CGST, and SGST are different types of GST taxes in India.
What is CGST?
The full form of CGST is the Central Goods and Services Tax. This applies to the central government when goods or services
are sold in the same state.
What is SGST?
SGST (Full Form-State Goods and Services Tax) is also levied on the sale of goods and services within the state.
SGST is paid to national authorities.
Do I pay CGST and SGST at the same time? CGST and SGST may be levied on the same transaction.
However, for each type of GST, the tax rate must be legally maintained below 14%. The income is then distributed between
the state and the central authority.
What is IGST?
The Comprehensive Goods and Services Tax applies to goods and services that move between states, as well as goods
and services that are exported or imported into India.
Import and export of IGST.
GST applies to goods imported and exported from India. However, in the case of export, once the goods leave the country,
the paid IGST can be recovered. This means that there is no need to pay any form of goods and services tax when exporting from India.
When imported into India, IGST is paid based on the value of the goods or services and any applicable tariffs.
You need to first calculate the full cost of the tariff, and then run the calculation of IGST and GST compensation tax.
You can find more information about Indian tariffs in this guide.
Difference between CGST, SGST, and IGST.
|Tax.||Full form.||When applicable.||Rate.|
|SGST/UTGST.||State Goods & Services Tax.||SGST is levied and collected by the state in which an intra-state transaction takes place. For example, if a supplier in Amaravati sells products to a dealer who is also based in Amaravati, SGST applies.||0%, 0.125%, 1.5%, 2.5%, 6%, 9%, 14%|
|CGST.||Central Goods & Services Tax.||CGST is collected by the central government on intra-state transactions. In the example above, both SGST and CGST would be paid by the dealer in Amaravati.||0%, 0.125%, 1.5%, 2.5%, 6%, 9%, 14%|
|IGST.||Integrated Goods & Services Tax.||IGST applies to inter-state transactions, as well as the import and export of goods and services. IGST revenues are split between the state and central government.||0%, 0.25%, 3%, 5%, 12%, 18%, 28%|
Import of goods and services.
Imported goods under the goods and services tax system are subject to IGST and compensation tax (if applicable),
as well as basic customs duty (BCD) and social welfare surcharges (up to 10% tax on BCD).
The BCD and social welfare surcharges paid at the time of import cannot be used as a credit for consumption tax; therefore, they will always be the cost of the importer.
Similar to the previous service tax law, when importing services, the service recipient is responsible for paying IGST under reverse charges. In addition, the government has also notified specific categories of goods and services that
the payee is required to pay GST based on reverse charges.
In addition, under the goods and services tax, the supply of authorized operations in the special economic zone is now zeroed out. Unlike the previous indirect tax system, which involves a large amount of paperwork for applying
for export tax rebates, the goods and services tax provides for a simplified online export tax rebate application process. Taxpayers need to submit a tax refund application and submit relevant documents online on the GST portal.
In order to promote the trade of small exporters, the concept of "merchant exporter" was introduced under the goods and services tax. Therefore, commercial exporters must now pay a nominal goods and services tax of 0.1% to purchase goods from domestic suppliers for export in accordance with the conditions specified in the notice.
Some instructions issued by the government regarding application for refunds are as follows:
- Must pass Aadhaar registration certification to be eligible to apply for a refund.
- A Refund credit bank account refers to the bank account under the applicant's name and obtained with his permanent account number (PAN).
- By selecting the option that does not include the LUT number in the refund application, taxpayers who choose
tax-exempt/unrated supplies can submit an option for cumulative ITC refunds (enable taxpayers to make tax-free and/or zero-rated supplies without LUTs) Submit a refund request (because they do not have a valid LUT number that can be entered in the refund request), Form RFD-01 has now been revised).
- For the convenience of exporters, a large number of refund applications across fiscal years are now allowed (previously there were restrictions on refund applications in different periods).
- Previously, for services requiring a zero-tax refund, foreign exchange remittances had to be received
within a specified time. Now, this requirement has also been extended to the supply of zero-rated goods. Accumulated ITC refunds are limited to the amount shown in Form GSTR-2A. However, the department is now clarified that the restrictions based on the notification will not affect ITC refunds used on import-related invoices/documents, ISD invoices, and import supplies (RCM supplies) that may be subject to reverse charges.
Not reflected in Form GSTR-2A.
It is allowed to refund wrong payments via the electronic credit ledger (the refund amount will be credited back
to the credit ledger).
Types of Customs Duty.
Tariff type Tariffs are levied on almost all goods imported into the country. Export duties are levied on a small number of goods specified in Schedule 2. Import duties are not levied on a few items such as life-saving drugs/equipment, fertilizers, and grains. Import duties are further divided into basic duties, additional duties, real countervailing duties, protection duties, education duties, and anti-dumping duties or safeguard duties.
Basic tariffs apply to imported goods within the scope of Article 12 of the 1962 Customs Law. These tariffs are levied at the rates specified in the First Schedule of the Tariff Act of 1975 and act in accordance with the provisions of Article 2. Depending on the importing country, the tax rate levied may be standard or preferential.
Additional duties countervailing duty (CVD):
This tariff is levied on imported goods in accordance with Article 3 of the Tariff Act of 1975. It is equivalent to a central consumption tax imposed on similar goods produced in India. The tariff is calculated based on the total value of the goods, including BDC and landing fees.
Obligation to protect:
A protection tax can be levied at the tax rate recommended by the Customs Commissioner to protect domestic industries from the impact of imports.
The tariff is levied at 2% of the total tariff, and the higher education tax is levied at 1% of the total tariff.
If imported goods are lower than the fair market price, anti-dumping duties can be levied, and they are limited to the difference between the export and the normal price (dumping margin).
If the government believes that a sudden increase in exports may harm the domestic industry, it will impose a safeguard tax.
ITC HS Code India 2022.
SECTION 6 | PRODUCTS OF THE CHEMICAL OR ALLIED INDUSTRIES
Chapter 33 | Essential oils, and resinoids; perfumery, cosmetic or toilet preparations (soon online).