Types of GST in India: CGST, SGST, IGST & UTGST Explained

India applies four types of GST: CGST, SGST, IGST, and UTGST. Each type serves a distinct purpose and applies under specific transaction conditions. Understanding the difference helps businesses charge the correct tax, maintain compliant invoices, and avoid costly filing errors.

GST came into effect on July 1, 2017, and replaced over 17 indirect taxes levied by both the central and state governments of India. It brought manufacturers, traders, and service providers under a single, unified tax framework.

The type of GST that applies to any transaction depends on the supplier’s location and the place of supply. An intra-state sale attracts a different set of taxes than an inter-state one. This blog explains all four types of GST in detail and includes simple examples to help you apply the correct tax type every time.

GST in India: The Big Picture

India introduced GST to replace the complicated indirect tax system that previously existed across multiple state and central jurisdictions. Earlier, businesses faced several taxes such as excise duty, service tax, value–added tax, entry tax, and luxury tax.

These overlapping taxes increased compliance costs and created confusion for businesses operating across multiple states. The Government of India introduced GST to create a single unified tax system under the “One Nation, One Tax” concept.

The GST framework operates under the Central Goods and Services Tax Act, 2017, and the Integrated Goods and Services Tax Act, 2017. These Acts define how authorities levy, collect, and distribute GST across India.

Businesses exceeding ₹40 lakhs turnover (₹20 lakhs for services) must register for GST before collecting and remitting this tax.

The following major taxes became part of GST after implementation:

• Central Excise Duty
• Service Tax
• Value Added Tax (VAT)
• Central Sales Tax (CST)
• Entry Tax and Octroi
• Luxury Tax and Entertainment Tax

GST follows a destination-based taxation principle, which means the tax revenue goes to the state where consumption occurs.

For example, if a manufacturer in Maharashtra sells goods to a buyer in Karnataka, Karnataka receives the final tax revenue. This approach ensures fair distribution of tax income among states based on actual consumption of goods and services.

The GST Council, established under Article 279A of the Constitution, regulates GST policies and rate decisions. The council includes the Union Finance Minister and finance ministers from all states to ensure cooperative federal taxation.

Note: You can also calculate your GST liability instantly using RegisterKaro’s Online GST Calculator to ensure accurate billing and compliance.

What are the Different Types of GST in India?

The Indian GST system includes four main types designed to handle taxation between the central government, states, and union territories.

The four types of GST implemented in India include the following categories:

a. Central Goods and Services Tax (CGST)

The Central Goods and Services Tax, aka CGST, represents the central government’s share of tax collected on the intrastate supply of goods and services. This tax applies when both the buyer and seller operate within the same state.

When a transaction occurs within one state, authorities divide GST into two equal components called CGST and SGST. The central government collects CGST and deposits it into the national treasury. The respective state government collects SGST and credits the amount to its state treasury. 

Example: A Delhi-based retailer sells shoes worth ₹10,000 to a customer in Delhi. The applicable GST rate is 18%. CGST will be 9% = ₹900, and SGST will be 9% = ₹900. The total GST charged is ₹1,800. The central government gets ₹900 as CGST, and the Delhi government gets ₹900 as SGST.

b. State Goods and Services Tax (SGST)

The full form of SGST is State Goods and Services Tax, which represents the tax portion collected by state governments for intrastate transactions involving goods and services. Whenever a sale occurs within the same state, the state government collects SGST along with CGST from the buyer. Both taxes apply simultaneously, but each government receives its respective portion of the collected GST.

Example: A retailer sells electronic products worth ₹20,000 inside the same state with an applicable GST rate of 18%. The total GST = ₹3,600, where ₹1,800 becomes CGST, and the remaining ₹1,800 becomes SGST.

This structure ensures balanced tax distribution between the central government and the state where consumption occurs.

c. Integrated Goods and Services Tax (IGST)

Integrated Goods and Services Tax, also known as IGST, applies when goods or services move between two different states within India. The central government collects IGST first and later distributes the appropriate share to destination states. 

This system simplifies interstate trade as businesses pay only one integrated tax instead of separate central and state taxes. IGST also applies to imports of goods and services entering India from international markets.

Example: A manufacturer in Rajasthan sells machinery worth ₹5,00,000 to a buyer in West Bengal. The applicable GST rate is 18%. IGST will be 18% = ₹90,000. The central government collects this ₹90,000 and transfers West Bengal’s share to the West Bengal government.

d. Union Territory Goods and Services Tax (UTGST)

Union Territory Goods and Services Tax applies in Union Territories that do not have their own state legislature. For instance:

• Dadra and Nagar Haveli and Daman and Diu (DNHDD)
• Lakshadweep
• Ladakh
• Andaman and Nicobar Islands
• Chandigarh

The Union Territory Goods and Services Tax Act, 2017, governs UTGST.

In these regions, UTGST replaces SGST because union territories operate under direct central administration. Whenever a business sells goods within these territories, both CGST and UTGST apply together on the transaction.

Example: A shop in Chandigarh sells electronics worth ₹20,000 to a local customer. If the GST rate is 18%, CGST will be 9% = ₹1,800, and UTGST will be 9% = ₹1,800. Total GST = ₹3,600.

Compare these GST types quickly using the table below:

GST Type	Collected By	Applicable On	Revenue Goes To
CGST	Central Govt.	Intra-State	Centre
SGST	State Govt.	Intra-State	State
IGST	Central Govt.	Inter-State / Imports	Centre + State
UTGST	Central Govt.	UT (no legislature)	Union Territory

GST Rate Slabs: A Quick Reference

India’s GST rate structure went through a major reform following the 56th GST Council meeting on 3rd September 2025. The old system had six slabs: 0%, 3%, 5%, 12%, 18%, and 28%. Under the new GST reforms, effective from 22nd September 2025, India now primarily follows four slabs: 0%, 5%, 18%, and 40%. The 12% and 28% slabs have largely been eliminated.

Here is a breakdown of the current GST rate structure:

0% (Nil / Exempt)	This includes fresh fruits, vegetables, milk, bread, life-saving medicines, and the majority of healthcare services. Several items that were earlier at 5% or 12% have moved into this nil-rated category under GST 2.0.
5% (Merit / Essential Rate)	This category includes daily essential goods and services such as edible oils, packaged food, agricultural equipment, healthcare products, handicrafts, and homeopathic medicines. Many items previously taxed at 12% or 18% have moved in this rate slab to reduce the burden on common households.
18% (Standard Rate)	This is now the primary standard slab covering most goods and services. It includes IT services, financial services, telecom services, restaurant services, consumer electronics, small cars, motorcycles, and household appliances such as ACs, TVs, and washing machines. This slab now largely includes items that previously fell under the 28% category.
40% (De-merit / Sin Rate)	This is a new slab introduced under GST 2.0. It applies to luxury and socially harmful goods such as premium cars, yachts, private aircraft, pan masala, tobacco products, cigarettes, gutkha, and aerated beverages. This slab replaces the earlier system of 28% GST plus a separate compensation cess, making billing simpler for businesses.
Special Rates (3% and 0.25%)	These niche rates continue to apply to specific categories. Gold, silver, and processed precious metals attract 3% GST. Rough and semi-precious stones attract 0.25% GST. These special rates remain unchanged under GST 2.0.

Note: GST rates change periodically based on GST Council decisions. Always refer to the official GST portal (gst.gov.in) for the most updated and accurate rate list for your specific product or service category.

Difference Between the 4 Types of GST in India

The table below explains how each GST type works and when it applies:

GST Type	Collected By	Applicable On	When It Applies	Revenue Goes To
CGST (Central GST)	Central Government	Intra-state supply	When the buyer and seller operate in the same state	Central Government
SGST (State GST)	State Government	Intra-state supply	Applies together with CGST for transactions within the same state	State Government
IGST (Integrated GST)	Central Government	Inter-state supply and imports	When goods or services move between two different states or enter India	Shared between the Centre and the destination state
UTGST (Union Territory GST)	Central Government	Union Territories without a legislature	Applies with CGST when transactions occur within eligible Union Territories	Union Territory administration

This comparison makes it easier to identify which GST type applies to a transaction and helps businesses charge the correct tax on every invoice.

Intra-State vs Inter-State Supply: How It Determines Your GST Type?

The single most important factor that decides which type of GST applies to a transaction is whether the supply is intra-state or inter-state.

• An intra-state supply occurs when both the buyer and seller operate within the same state. In such transactions, businesses charge CGST and SGST together on the invoice.
• An inter-state supply occurs when goods or services move between two different states. In such situations, businesses charge IGST instead of CGST and SGST.

The GSTIN (Goods and Services Tax Identification Number) plays an important role here. The first two digits of a GSTIN represent the state code. For example, a GSTIN starting with 07 belongs to Delhi, and one starting with 29 belongs to Karnataka. By comparing the GSTINs of the supplier and buyer, you can easily determine whether a transaction is intra-state or inter-state.

Understanding these different types of supply under GST will help you avoid errors in tax filing.

How Input Tax Credit Work Across Different GST Types?

Input Tax Credit (ITC) means the credit a business gets for the GST it already paid on its purchases. When you buy raw materials or services for your business and pay GST on them, you can deduct that tax from your final GST liability. You only pay the difference to the government.

For example, if you paid ₹1,000 as GST while buying raw materials and you need to collect ₹1,500 GST on your final sale, you only pay ₹500 to the government. The ₹1,000 you already paid becomes your ITC.

ITC Rules for Each GST Type

The GST framework defines clear rules that determine how businesses use Input Tax Credit (ITC) to offset their GST liabilities. When a business pays GST on purchases, that tax becomes ITC. Businesses can then use this credit to reduce the GST they must pay on their sales.

However, the law specifies the exact order in which businesses must use this credit. The table below explains the ITC set-off sequence for each GST component:

GST Paid	Sequence
CGST	1st: CGST → 2nd: IGST
SGST	1st: SGST → 2nd: IGST
IGST	1st: IGST → 2nd: CGST → 3rd: SGST

One important rule applies when businesses use this credit to pay their GST liability. A business cannot use CGST input tax credit to pay SGST liability, and it also cannot use SGST credit to pay CGST liability. These two credit pools remain completely separate.

However, IGST credit provides more flexibility. Businesses can use IGST credit to pay IGST first, then CGST, and finally SGST if any balance remains.

This rule explains why correctly identifying a transaction as intra-state or inter-state matters so much. Incorrect classification may force businesses to use the wrong ITC pool and create compliance issues during GST audits.

Many businesses often make mistakes applying the correct GST type, which leads to compliance issues and filing errors. RegisterKaro’s experienced GST experts guide you to classify transactions accurately, charge the right tax, and maintain proper filings. Contact us today to simplify GST compliance with professional support.