Components of GST — CGST, SGST/UTGST and IGST

2. Components of GST — CGST, SGST/UTGST and IGST

India is a federal country, with both the Central Government and the State Governments constitutionally empowered to levy tax on the supply of goods and services. GST is therefore designed as a dual GST model — the Centre and the States levy GST concurrently on the same transaction, under three separate heads, depending on whether the supply is within one state or across state lines.

On an intra-state supply (where the supplier and the place of supply are both in the same State — for example, a sale by a trader in Vijayawada to a buyer in Visakhapatnam, both within Andhra Pradesh), GST is collected under TWO heads simultaneously, at half the total applicable rate each:

1. Central Goods and Services Tax (CGST) — levied and collected by the Central Government.
2. State Goods and Services Tax (SGST) — levied and collected by the State Government (Andhra Pradesh, in a transaction within AP). Where the supply is within a Union Territory without its own legislature, the equivalent levy is called Union Territory Goods and Services Tax (UTGST) instead of SGST.

On an inter-state supply (where the supplier and the place of supply are in two different States, or one of them is outside India — for example, a sale by a trader in Andhra Pradesh to a buyer in Telangana, or an export/import), a single, combined tax is charged instead:

3. Integrated Goods and Services Tax (IGST) — levied and collected by the Central Government, at a rate equal to CGST plus SGST combined, on inter-state supplies, imports into India, and supplies to or by a Special Economic Zone. The Centre subsequently apportions the State's share of the IGST collected to the destination State — the State where the goods or services are actually consumed — consistent with GST's destination-based design.

Worked illustration — the same transaction, taxed two different ways. Suppose a dealer sells goods worth ₹15,000 (before tax) at the GST rate applicable to that item, 18%.

Notice that the BUYER pays the same total tax, ₹2,700, either way — GST's dual structure changes only which government department collects which portion of the tax, and under which head, not the total burden on the transaction. …