Update (April 28, 2026): The 56th GST Council meeting (September 3–4, 2025) approved a major GST rate rationalisation, effective 22 September 2025. The earlier four-slab structure (5%, 12%, 18%, 28%) has largely been replaced by two primary rates — 5% and 18% — with a new 40% slab for select luxury and sin goods. Several essential items have moved to nil/zero GST. This is now referred to as GST 2.0. Businesses should verify the exact rate for their HSN/SAC codes, as the changes are item-specific.
GST charged and collected can be of different types — CGST, SGST, IGST and UTGST. The tax authorities collect CGST and SGST/UTGST or only IGST, depending on whether the transaction is intrastate or interstate, respectively. Let's dive into the meaning and applicability of these terms along with examples.
Unlike the pre-GST regime — when there were multiple taxes such as Central Excise, Service Tax, State VAT, and several others — the different types of GST now in force have simplified the whole structure. The four types of GST applicable in India are:
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When the supply of goods or services happens within a state or union territory — intra-state transactions — both CGST and SGST/UTGST are collected. If the supply happens between states — inter-state transactions — only IGST is collected.
The use of the correct GSTIN becomes important to identify which tax components apply. Validate the GST number using the GST search tool before using it in any sales invoice. And remember — GST is a destination-based tax. The state where the goods are consumed gets the revenue, not the state where those goods were manufactured.
The full form of IGST is Integrated Goods and Services Tax. Under the different types of GST, IGST is levied on all interstate supplies of goods and/or services — or across two or more states/Union Territories. Its levy and collection are governed by the IGST Act, 2017.
IGST applies to any supply of goods and/or services in both cases of import into India and export from India. Exports are zero-rated. The tax is shared between the Central and State governments.
Consider that M/s Rajesh Ltd from Chandigarh sold goods to Anand Ltd from Dadra & Nagar Haveli & Daman & Diu worth Rs. 1,00,000. The applicable GST rate is 18% — which means 18% IGST. The dealer charges Rs. 18,000 as IGST. This goes to the Centre, which then splits it between the Centre and Dadra & Nagar Haveli & Daman & Diu (as the ultimate consuming state/UT).
Update (April 28, 2026): Under GST 2.0, the IGST rate for most goods is now either 5% or 18%, with 40% applying to select luxury and sin goods. The above example uses 18% IGST, which remains one of the two primary standard rates.
CGST stands for Central Goods and Services Tax. It is levied on intrastate supplies of both goods and services by the Central Government. Levy and collection of CGST are governed by the CGST Act, 2017.
Together with CGST, an equal value of SGST is also levied on the same intrastate supply — but collected by the respective state government. Section 8 of the CGST Act clearly states that taxes are levied on all intrastate supplies of goods and/or services, with the rate not exceeding 14% each. Any CGST tax liability can only be set off against CGST or IGST input tax credit — not SGST.
SGST means State Goods and Services Tax. An equivalent amount of SGST is levied on intrastate supplies of goods and services by the particular state government where the product sold is consumed.
Levy and collection of SGST are governed by the respective state's SGST Act, 2017 — for instance, the Telangana GST Act. After SGST came in, all state-level taxes such as value-added tax, entertainment tax, luxury tax, entry tax, and the rest were merged under it. Any SGST tax liability can only be set off against SGST or IGST input tax credit — not CGST.
If a seller in Chhattisgarh sells a product to a buyer also in Chhattisgarh, both CGST and SGST apply. Both the Central and state governments share the levy in an appropriate proportion.
Suppose M/s Rajesh Ltd, a dealer in Chhattisgarh, sold goods to Vijay Ltd in Chhattisgarh worth Rs. 10,000. The GST rate is 18% — comprising CGST at 9% and SGST at 9%. The dealer collects a total of Rs. 1,800. Out of this, Rs. 900 goes to the Central Government and Rs. 900 goes to the Chhattisgarh Government.
Actually — let me put it simply. Intrastate means the money gets split. Interstate means it goes to the Centre first, then gets distributed.
UTGST stands for Union Territory Goods and Services Tax. It works exactly like SGST but applies in Union Territories that don't have their own legislature. It is levied on intra-UT supplies together with CGST and is governed by the UTGST Act, 2017. The ITC utilisation order of UTGST mirrors that of SGST — UTGST credit is first set off against UTGST liability, and any balance can be used against IGST.
UTGST applies to supplies within: Ladakh, Andaman and Nicobar Islands, Chandigarh, Dadra & Nagar Haveli and Daman & Diu, and Lakshadweep. Delhi, Jammu & Kashmir, and Puducherry fall under SGST law — they have their own legislatures.
India is a federal country. Both the Centre and the states have been assigned powers to levy and collect taxes by the Constitution. Both have distinct responsibilities — and both need tax revenue to fulfil them.
That's why the Centre and states levy GST simultaneously. The three-type tax structure exists to help taxpayers take credit against each other — ensuring "One Nation, One Tax."
But one thing is worth noting. GST in India is not literally a single flat tax. It is a dual GST model because both Parliament and the states have constitutional power to levy it. That is why the system has four types instead of one national levy. And a few categories — alcohol for human consumption, certain petroleum products — still sit outside the GST net entirely.
To determine whether CGST, SGST, or IGST applies to a taxable transaction, you need to figure out whether it is an intrastate or interstate supply.
Intrastate supply is when the supplier and the place of supply — the buyer's location — are in the same state. Here, both CGST and SGST are collected. CGST goes to the Centre, SGST goes to the state.
Interstate supply is when the supplier and buyer are in different states. This also covers imports, exports, and supplies made to or by an SEZ unit. Here, only IGST is collected from the buyer.
The CGST Rules define exactly how CGST, SGST, and IGST input tax credits are adjusted against respective tax liabilities. Follow them closely — wrong ITC utilisation leads to fines.
Here's a practical example of how the ITC chain works across the different types of GST:
Manufacturer A (Maharashtra) sells goods worth Rs. 10,000 to Dealer B (Maharashtra). Dealer B resells to Trader C (Rajasthan) for Rs. 17,500. Trader C sells to end-user D (Rajasthan) for Rs. 30,000.
Applicable rates: CGST = 9%, SGST = 9%, IGST = 18%.
ITC offset order for IGST credit: First, set off against IGST liability. Then, set off against CGST or SGST — your choice.
Because GST is a consumption-based tax, Rajasthan (where the goods were finally consumed) should receive GST — not Maharashtra. So Maharashtra transfers its SGST credit of Rs. 900 (used in payment of IGST) to the Centre. The Central Government then transfers Rs. 450 IGST to Rajasthan.
And that's exactly why all three taxes — SGST, CGST, and IGST — are needed together. They serve the two core purposes of GST:
A: The four types of GST in India are CGST (Central Goods and Services Tax), SGST (State Goods and Services Tax), IGST (Integrated Goods and Services Tax), and UTGST (Union Territory Goods and Services Tax). Which one applies depends entirely on whether the transaction is intra-state or inter-state, and whether the supply happens in a state or a union territory without its own legislature.
A: CGST and SGST are both charged on intra-state transactions — CGST goes to the Centre, SGST goes to the state, both at equal rates. IGST is charged on inter-state transactions, imports, and exports — collected by the Centre and later split between the Centre and the destination state. The key rule: same state means CGST + SGST; different states means IGST only.
A: UTGST applies in Union Territories that do not have their own legislature — Ladakh, Andaman and Nicobar Islands, Chandigarh, Dadra & Nagar Haveli and Daman & Diu, and Lakshadweep. Union Territories that do have a legislature — Delhi, Jammu & Kashmir, and Puducherry — fall under SGST, not UTGST.
A: Yes. IGST credit must first be used against any IGST liability. Whatever remains can then be used to set off either CGST or SGST liability — in whichever order the taxpayer prefers. However, CGST credit cannot be used to pay SGST, and SGST credit cannot be used to pay CGST. This cross-utilisation rule is strict and must be followed to avoid compliance issues.
A: The 56th GST Council approved a major rate rationalisation effective 22 September 2025, commonly called GST 2.0. The earlier four-slab structure of 5%, 12%, 18%, and 28% was largely simplified to two primary rates — 5% and 18% — with a new 40% slab for select luxury and sin goods. Several essential items moved to nil/zero GST. However, the changes are item-specific, so businesses must verify the exact rate using the HSN/SAC code for their particular goods or services.
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