What Is GST? CGST, SGST, IGST and UTGST Explained

Goods and Services Tax (GST) is India’s single tax on the supply of goods and services, in force since 1 July 2017. It is collected where goods or services are consumed. A sale within one state carries CGST plus SGST, a sale across states carries IGST, and most items are taxed at 5% or 18%.

Key facts

GST in one paragraph

Before GST, the Centre charged excise duty and service tax, and states charged VAT, entry tax and other levies. GST replaced 17 such taxes and 13 cesses. It is charged on the “supply” of goods or services rather than on manufacture or sale separately. Each business in the chain pays tax on what it sells and claims credit for tax paid on what it buys. The tax is destination-based, so revenue goes to the state where the buyer consumes the goods or service.

The GST Council, made up of the Union Finance Minister and state finance ministers, recommends rates and exemptions. The Goods and Services Tax Network (GSTN), owned 50:50 by the Centre and the states, runs the portal at gst.gov.in.

The four types of GST

UTGST applies in the Andaman and Nicobar Islands, Lakshadweep, Dadra and Nagar Haveli and Daman and Diu, Ladakh and Chandigarh. Delhi and Puducherry have legislatures, so they charge SGST.

CGST and SGST (or UTGST) are split equally. On an 18% item sold within a state, the bill shows 9% CGST and 9% SGST. IGST is generally twice the CGST rate, so the same item sold to another state carries 18% IGST.

Intra-state vs inter-state supply

Which tax applies depends on where the supplier is and where the goods or service are delivered:

The Centre collects IGST and passes the state share to the state where the goods or services are consumed. Exports and supplies to SEZ units are zero-rated.

Input tax credit basics

Input tax credit (ITC) lets a registered business subtract the GST it paid on purchases from the GST it collects on sales. That removes the “tax on tax” of the old system.

A simple example at 18%:

1. A trader buys stock for ₹1,000 plus ₹180 GST.
2. The trader sells it for ₹1,500 plus ₹270 GST.
3. The trader pays the government ₹270 minus ₹180, which is ₹90.

Credit can be used only in set ways. CGST credit cannot pay SGST, and SGST credit cannot pay CGST. IGST credit can be used against IGST, CGST and SGST. Credit also depends on the supplier reporting the invoice, which is why buyers check a seller’s GSTIN before paying. Our guide on how to check a GST number shows how.

Businesses under the composition scheme pay a flat rate on turnover and cannot claim ITC. The scheme is open to businesses with turnover up to ₹1.5 crore in most states.

Current rate structure

GST 2.0 took effect on 22 September 2025 after the 56th GST Council meeting. It removed the 12% and 28% slabs.

Look up a specific item on our GST rates and slabs page. The GST 2.0 review lists what moved and when.

Who must register

Under Section 22 of the CGST Act, you must register once your aggregate turnover in a financial year crosses the limit:

Section 24 requires some businesses to register whatever their turnover. These include inter-state suppliers of taxable goods, casual taxable persons, people liable under reverse charge and most sellers on e-commerce platforms. Small sellers supplying goods within their own state through e-commerce operators have been exempt from compulsory registration since October 2023.

The steps, documents and timelines are on our GST registration page. If your business crosses state lines or mixes goods and services, a GST practitioner can confirm your limit.

Frequently asked questions

What is the full form of GST?

Goods and Services Tax. It replaced central excise, service tax, state VAT and several other indirect taxes from 1 July 2017.

What are the types of GST?

There are four: CGST and SGST on sales within a state, UTGST in Union Territories without a legislature, and IGST on sales between states and on imports.

Why does my bill show both CGST and SGST?

The seller and the place of supply are in the same state. The rate is split equally, so 18% shows as 9% CGST plus 9% SGST.

What are the current GST slabs?

The main rates are 5% and 18%, with 40% on luxury and sin goods, since 22 September 2025. Some items are nil-rated, and gold and silver pay 3%.

Are petrol and diesel under GST?

No. Crude, petrol, diesel, ATF and natural gas will come under GST only from a date the GST Council recommends. Until then they carry central excise and state VAT.

Which Act governs GST?

The CGST Act, 2017, the IGST Act, 2017, the UTGST Act, 2017 and each state’s SGST Act. The GST (Compensation to States) Act, 2017 governed the compensation cess.

Sources

• Nine Years of GST: Simplifying Taxation, Strengthening India — PIB (checked 16 Sep 2026)
• GST Concept and Status — CBIC (checked 16 Sep 2026)
• Section 22, CGST Act, 2017: persons liable for registration — CBIC Tax Information Portal (checked 16 Sep 2026)
• Section 24, CGST Act, 2017: compulsory registration — CBIC Tax Information Portal (checked 16 Sep 2026)
• Union Territory Goods and Services Tax Act, 2017 — CBIC Tax Information Portal (checked 16 Sep 2026)
• GST rate reforms 2025: item-wise changes — PIB (checked 16 Sep 2026)