What is CGST?, CGST Full Form, Tax Rate & Introduction


GST is divided into three parts. Central GST (CGST) is one such part of the GST tax regime.

CGST Full Form

The full form of CGST is Central Goods & Services Tax / Central GST.

What is CGST? – Introduction

CGST (Central Goods & Services Tax) is part of the main goal of GST being one tax one nation. As the name suggests, CGST will be levied on the goods and services by the Central Government. It means that the indirect taxes levied by the Central Government will be replaced by the CGST tax under GST. These indirect taxes include Central Excise duty, Service tax, Central Sales tax, additional excise duties, Additional customs duty also known as CVD, the special additional duty of customs (SAD), excise duties which fall under the medical and toiletries preparation Act, surcharges and cesses.

What is CGST?

CGST will be governed under the Central Goods and Service Tax Act 2016. It will be majorly charged on the sale or movement of goods and services of standard services and commodities that can be changed from time to time by separate individuals. The CGST will be levied mainly on the intrastate supply of goods and services. All the intrastate supply of goods and services half portion of the tax amount will be received by the Central Government which is called as CGST.

CGST Rates – Let’s take an example:

Let’s say Mr. A, a manufacturer of goods from Maharashtra sells goods to his dealer Mr. B from Maharashtra worth Rs. 100,000. GST applied rate here is assumed to be 18%. Here, in this case, Mr. B will pay Rs 18,000 to Mr. A as GST tax, however, Mr. A needs to deposit half amount ie Rs 9,000 to Central Government and the other half Rs 9,000 ie (9% equally) to the State Government ie Maharashtra in this case. The former amount of Rs 9,000 paid to the Central Government is called Central GST (CGST) which belongs to the Central Government.

The tax collected from CGST is for the Central Government. Further adjustments of allocating the amount to different states will be performed by the Central Government. The burden of adjustments of various taxes have been lifted from the taxpayers and it will be taken care at the Central and State government levels.

In the case of input tax credit, there is full utilization of tax paid on inputs and capital goods. However, as per the Act, there is a restriction that on the CGST paid by the taxpayers must be utilized as input tax credit only against the payment of CGST liability. It cannot be utilized for the payment of SGST or IGST liabilities.

The information provided above is the simple and basic on understanding Central Goods & Services Tax – CGST.