Structure of GST in India — CGST, SGST, IGST, UTGST and the GST Council

India follows a dual GST model, because both the Central Government and the State Governments have the constitutional power to levy tax on the supply of goods and services, and GST had to be designed to preserve that shared power rather than take it away from one level of government.

On an intra-state supply (a sale within the same state, say within Gujarat), two taxes are charged simultaneously on the same transaction value:

• CGST (Central Goods and Services Tax) — collected by the Central Government.
• SGST (State Goods and Services Tax) — collected by the State Government of the state where the sale takes place.

Both are usually charged at the same rate, so a combined rate of, say, 18% on an intra-state sale is commonly split as 9% CGST + 9% SGST.

On an inter-state supply (a sale from one state to a buyer in another state, or an import), a single tax is charged instead of CGST and SGST separately:

• IGST (Integrated Goods and Services Tax) — collected by the Central Government, at a rate equal to CGST + SGST combined, and later apportioned between the Centre and the destination state as per the destination principle explained above.

UTGST (Union Territory Goods and Services Tax) works exactly like SGST but applies in place of SGST for supplies within a Union Territory that does not have its own legislature (such as Chandigarh or the Andaman & Nicobar Islands) — it is charged alongside CGST on an intra-UT supply, exactly as SGST is charged alongside CGST on an intra-state supply. …