GST applicable in India can be classified into two broad categories. They are explained below:
1. Central Goods and Service Tax (CGST), State Goods and Service Tax (SGST) and Union Territory Goods and Service Tax (UTGST):
- When the location of the supplier and the place of supply i.e., location of the buyer are in the same state, the seller collects CGST as well as SGST.
- Here, the transactions are termed as intra-state transactions. Similarly, UTGST and CGST are collected by union territories for transactions taking place within a union territory.
- The CGST gets deposited with Central Government and SGST gets deposited with State Government.
Example:
- Suppose, a good is produced in Ahmedabad and sold in Bhavnagar (intra-state).
- Let the cost of good be ₹ 100/- and suppose the applicable GST is 18% where in CGST is 9% and SGST is 9%.
- Thus, the total price of the product will be
= ₹ 100 + CGST 9% + SGST 9% = ₹ 100 + ₹ 9 + ₹ 9 = ₹ 118
- Thus, the consumer will have to pay? 118 as the final price.
2. Integrated Goods and Service Tax (IGST):
When a good is produced in one state and is sold in another state, the GST rate applied on the product is called Integrated Goods and Service Tax (IGST).
Example:
- Suppose a good produced in Ahmedabad is sold in Mumbai (inter-state). Let the cost of good be ₹ 100/- and suppose the applicable IGST is 18%.
- Thus, the total price of the product will be
= ₹ 100 + IGST 18% = ₹ 100 + ₹ 18 = ₹ 118
- Thus, the consumer will have to pay? 118 as the final price. The entire amount of GST goes to the central government.
