Components of Goods and Services Tax (GST)

Components of Goods and Services Tax (GST)

There are 3 taxes applicable under this system:

components of gst

  1. CGST:- Central Goods and Services Tax is collected by the Central Government on an intra-state sale (Eg: transaction happening within Maharashtra).
  2. SGST:- State Goods and Service Tax is collected by the State Government on an intra-state sale (Eg: transaction happening within Maharashtra).
  3. IGST:  Integrated Goods and Services Tax is collected by the Central Government for inter-state sale (Eg: Maharashtra to Tamil Nadu).

Illustration: 

  • Let us assume that a dealer in Uttar Pradesh had sold the goods to a dealer in Kerala worth Rs. 50,000. The tax rate is 18% comprising of only IGST.

In such case, the dealer has to charge Rs. 9,000 as IGST. This revenue will go to the Central Government.

  • The same dealer sells goods to a consumer in Uttar Pradesh worth Rs. 50,000. The GST rate on the good is 12%. This rate comprises of  CGST at 6% and SGST at 6%.

The dealer has to collect Rs. 6,000 as Goods and Service Tax. Rs. 3,000 will go to the Central Government and Rs. 3,000 will go to the Uttar Pradesh government as the sale is within the state.

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