What is Central Goods and Services Tax (CGST)?
In contrast to the pre-GST era, which involved multiple taxes like Central Excise, Service Tax, State VAT, etc., the GST law simplifies the system by introducing a single tax structure with three components: CGST, SGST, and IGST.
CGST, or Central Goods and Services Tax, consolidates the previous central indirect taxes into a unified framework.
What is the Meaning of CGST?
- CGST, or Central Goods and Services Tax, consolidates previous central indirect taxes and is applicable for the intrastate movement of goods and services, meaning within one state. The Central Goods and Services Tax Act 2017 specifies that CGST applies to the entire nation except Jammu and Kashmir.
- For intrastate movements, both CGST and SGST apply. Revenues from CGST go to the central government, while revenues from SGST go to the respective state government.
- For example, in the case of intrastate sales, where a product is manufactured and sold within Karnataka, both SGST and CGST are levied. SGST revenue goes to the Karnataka state government, and CGST revenue goes to the central government.
- GST rates are determined by the GST Council, which meets as needed to discuss and decide on rates. Maharashtra has consistently been a leader in GST collections, followed by Karnataka. The total tax liability is typically divided equally between the state and central government in most cases.
CGST Slab Rates
The CGST slab rates are given below:
CGST rates | When are the Rates Applicable |
5% | Commonly used products, including cream, yoghurt, paneer, cashew nuts, raisins, fruits, nuts, and similar items, fall under the 5% GST rate category. For these products, 2.5% of the GST goes to the state government, while the remaining 2.5% goes to the CGST. This category encompasses various household items. |
12% | The 6% GST rate, the second slab under GST, applies to various items such as citrus fruits, jams, sausages, 20L drinking water, statues, pots, jars, geometry boxes, cutlery, railway coaches, printer ink, wooden toys, and more. Each product incurs 6% CGST and 6% SGST, covering a range of processed foods. |
18% | Items taxed at 18% under GST include bindis, chocolates, fountain pens, tripods, soap, toothpaste, and industrial intermediate products. In this category, 9% is allocated to SGST, and 9% to CGST. The Central Goods and Services Tax Act 2017 provides a comprehensive list of items falling under this rate. |
28% | Products taxed at a GST rate of 28% include cigarettes, caffeinated beverages, pan masala, motor cars, motorcycles, air conditioners, refrigerators, and other luxury items. Within this category, 14% is allocated to SGST, and 14% to CGST. |
3% | Items such as coins, gold, silver, platinum, imitation jewelry, etc., are taxed at a GST rate of 3%. Within this rate, 1.5% is assigned to SGST, and 1.5% to CGST. |
0.25% | Precious stones are subject to a GST rate of 0.25%, with 0.125% allocated to CGST and 0.125% to SGST. |
0% | Certain products are exempt from GST, taxed at 0%. This category includes live mammals, bovine mammals, birds, insects, fish, curd, lassi, buttermilk, bananas, apples, grapes, human hair, sanitary napkins, etc. |
Features of CGST
The features of CGST are given below:
- CGST is applicable to the supply of goods and services within the boundaries of a single state.
- The revenue generated from CGST goes to the central government, providing a source of income for the central administration.
- CGST rates are uniform across all states, ensuring consistency in the taxation of intrastate transactions.
- GST in India follows a dual structure with both CGST and SGST (State Goods and Services Tax) being levied simultaneously on intrastate supplies.
- The CBIC is responsible for the administration and collection of CGST.
- CGST works in conjunction with SGST to ensure a comprehensive and unified indirect tax system in the country.
The Rules of CGST
The rules of CSGT are specified below:
- For each and every good taxable, a tax invoice must be provided.
- If the registration falls under the GSt composition scheme, then a supply bill must be provided.
- Each invoice provided must have a unique serial number.
- The GST must be filed in equal proportions. It means CGST must be taxed at 9% and SGST (State Goods and Service Tax) at 9%.
Documents Required
Following documents must be submitted for CGST registration:
- Application Form
- Address Proof
- PAN Card
FAQs on CGST
- What is the CGST formula?
The applicable GST rate divided by two is equivalent to the CGST.
- Who collects the CGST?
The Indian Central Government is in charge of collecting CGST.
- What is the CGST maximum rate?
The CGST rate can go up to 14%.
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