Dr. Soheli Ghose

Central Goods and Services Tax (CGST)
 Under GST, CGST is a tax levied on Intra State
supplies of both goods and services by the Central
Government and will be governed by the CGST Act.
SGST will also be levied on the same Intra State supply
but will be governed by the State Government.

 This implies that both the Central and the State
governments will agree on combining their levies with
an appropriate proportion for revenue sharing
between them. However, it is clearly mentioned in
Section 8 of the GST Act that the taxes be levied on all
Intra-State supplies of goods and/or services but the
rate of tax shall not be exceeding 14%, each.

State Goods and Services Tax (SGST)
 Under GST, SGST is a tax levied on Intra State supplies
of both goods and services by the State Government
and will be governed by the SGST Act. As explained
above, CGST will also be levied on the same Intra State
supply but will be governed by the Central
Government.
Note: Any tax liability obtained under SGST can be set off
against SGST

Example 1
 A Ltd. Sells certain commodity to B Ltd. Both A and B
have a place of business in the same state West Bengal.
 Thus the supply between A Ltd. and B Ltd. Will attract
CGST and West Bengal SGST.

Example 2 for CGST and SGST:
Let’s suppose Rajesh is a dealer in Maharashtra who sold
goods to Anand in Maharashtra worth Rs. 10,000. The
GST rate is 18% comprising of CGST rate of 9% and SGST
rate of 9%. In such case, the dealer collects Rs. 1800 of
which Rs. 900 will go to the Central Government and Rs.
900 will go to the Maharashtra Government.

Integrated Goods and Services Tax
(IGST)
Under GST, IGST is levied on all Inter-State supplies of
goods and/or services and will be governed by the IGST
Act. IGST will be applicable on any supply of goods
and/or services in both cases of import into India and
export from India.
Note: Under IGST, Exports would be zero-rated.
 Tax will be shared between the Central and State
Government.

What determines if CGST, SGST or
IGST is applicable?
 To determine whether Central Goods & Services Tax
(CGST), State Goods & Services Tax (SGST) or
Integrated Goods & Services Tax (IGST) will be
applicable in a taxable transaction, it is important to
first know if the transaction is an Intra State or an
Inter-State supply.

 Intra-State supply of goods or services is when the
location of the supplier and the place of supply i.e.,
location of the buyer are in the same state. In Intra-
State transactions, a seller has to collect both CGST
and SGST from the buyer. The CGST gets deposited
with Central Government and SGST gets deposited
with State Government.

 Inter-State supply of goods or services is when the
location of the supplier and the place of supply are in
different states. Also, in cases of export or import of
goods or services or when the supply of goods or
services is made to or by a SEZ unit, the transaction is
assumed to be Inter-State. In an Inter-State
transaction, a seller has to collect IGST from the buyer.

Example
 A Ltd. has its principal place of business in Gujarat
and sells certain commodity to B Ltd. in Maharashtra.
 Thus the supply between A Ltd. and B Ltd. Will attract
IGST.

Steps for charging GST
 1. Determine whether the activity is a supply within the
meaning of Sec 7(1) of Central Goods and Service Tax
2017.
 2. Determine whether the said supply is a Supply of
Goods or supply of Services. (This distinction is
significant to determine the Place of Provision, Point
of Taxation and Rates of Taxes).
 3. Determine the place of supply.

 4. Determine whether the supply is inter state or intra
state (for appropriate application of CGST, SGST & IGST)
 5. Determine the time of supply (to fix the point when the
liability to charge GST arises)
 6. Identify the rate of tax and applicable GST
Compensation Cess based on Goods and Services.
 7. Determine the value of Supply as per valuation
principles.
 8. Charge Tax.

Example
A Ltd. Is a manufacturer of Chocolates containing cocoa
and has its manufacturing plant in Gujarat. A Ltd.
Sold 2 tons of Chocolates to B Ltd. For Rs. 60000 (excl.
taxes) in its factory based out of Mumbai. Determine
the applicable GST to be charged.

Answer
 1. The said supply is a supply within the meaning of Sec
7(1).
 2. This is a supply of goods.
 3. The place of supply is Mumbai, Maharashtra.
 4. Its an Inter State Supply as the location of the supplier
is in Gujarat and the Place of Supply is Mumbai,
Maharashtra. Hence IGST will be applicable.

 5. Time of supply will be earlier of the following:
 A) The date of issue of invoice
 B) Last date of issue of invoice u/s 31
 C) Date of receipt of payment.
 6. Tax Rate is 18% and GST Compensation Cess is not
applicable.
 7. Value of supply will be the Transaction Value of Rs.
60000.
 8. Thus IGST = 18% of 60000 = 10800.
Total amount charged to the customer (end user) =
60000 + 10800= 70800.

An example for IGST:
 Consider that a businessman Rajesh from Maharashtra
had sold goods to Anand from Gujarat worth Rs.
1,00,000. The GST rate is 18% comprised of 18% IGST.
In such case, the dealer has to charge Rs. 18,000 as
IGST. This IGST will go to the Centre.

Payments to be made under GST
 Under GST the tax to be paid is mainly divided into 3 –
 • IGST – To be paid when interstate supply is made
(paid to center)
 • CGST – To be paid when making supply within
the state (paid to center).
 • SGST – To be paid when making supply within the
state (paid to state).

CIRCUMSTANCES CGST SGST IGST
GoodssoldfromDelhitoBombay NO NO YES
GoodssoldwithinBombay YES YES NO
GoodssoldfromBombaytoPune YES YES NO

 Apart from the above payments a dealer is required to
make these payments –
 Tax Deducted at Source (TDS) – TDS is a mechanism
by which tax is deducted by the dealer before making
the payment to the supplier

For example –
 A government agency gives a road laying contract to a
builder. The contract value is Rs 10 lakh.
 When the government agency makes payment to the
builder TDS @ 1% (which amounts to Rs 10,000) will be
deducted and balance amount will be paid.
 Tax Collected at Source (TCS) – TCS is mainly for e-
commerce aggregators. It means that any dealer selling
through e-commerce will receive payment after deduction
of TCS @ 2%.
 This provision is currently relaxed and will not be
applicable till notified by the government.

Taxes that are levied on an intra-
State supply
In terms of Section 9 of the CGST Act, 2017, intra-State
supplies are liable to CGST.
In terms of Section 7 of UTGST Act, 2017, intra State
supplies effected by a taxable person located in Union
Territory (within the Union Territory) will be liable to
UTGST.
 Therefore, in case of intra-State supplies in case of
State or Union Territory, CGST and SGST or CGST and
UTGST will be applicable respectively.

How to ascertain the taxable value
for levy of CGST & SGST/UTGST?
 Section 15 of the CGST Act, 2017 specifies that the
value of supply of goods or services or both shall be the
transaction value, which is the price actually paid or
payable for the said supply of goods or services or both
where the supplier and the recipient of the supply are
not related and the price is the sole consideration for
the supply.

 Further, Section 15 provides for certain inclusions
which will form part of the value viz., incidental
expenses, commission, interest, penalty etc. In cases
where the supplier and recipient are related persons or
where the price is not the sole consideration, the
provisions and method for ascertaining the value of
taxable supply as prescribed in the Central Goods and
Services Tax Rules (“the CGST Rules” or “the CGST
Rules, 2017”) (Rules 27 – 35) shall apply.