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    Types of GST in India

    types of gst

    On 1st July 2017, the government announced a new indirect tax regime under Goods and Services tax to replace several other indirect taxes like state VAT, customs duties, central excise duty, and entertainment tax. Understanding this new taxation system and its effects on businesses can be confusing. Therefore, to ease your understanding, we have curated a comprehensive guide on GST and its types.

    Let’s begin!

    Team Digit

    Goods and Services tax and types: An overview

    In simple words, GST is a tax applicable to the value added to goods and services at each stage in the supply chain. There are four types of GST, namely, CGST, SGST, IGST, and UTGST. Each type features different taxation rates applicable at the buyer’s end.

    If you are wondering how many types of GST are there in India, check out the following sections.

    Types of GST in India: Explained

    To understand the types of tax under GST, firstly, you need to understand the main motive behind this unified tax system’s introduction. The primary reason is to make the Central and State Governments independent of each other.

    Read on to learn about the 4 types of GST that exist in India.

    What is CGST?

    CGST stands for Central Goods and Services tax. It replaced all the previous taxes under the Central Government. Some examples of such taxes are central surcharges & cess and central excise duty. CGST is levied on the movement of goods within a state. 

    To understand the meaning of CGST, let us take an example.

    If a manufacturer produces a good in West Bengal and sells it intrastate (within the state), both SGST and CGST will be levied. The former will go to the West Bengal State Government, whereas the latter will reach the Central Government. In most cases, the tax is divided equally between the State and Central Governments as per the GST council mandate.

    Let us see the CGST applicable on various goods in the following table.

    Goods

    CGST Percentage

    Household items like tea, coffee, edible oil, sugar, and spices, life-saving medicines, Indian sweets, and coal

    2.5

    Processed foods

    6

    Capital products, hair oils, toothpaste, soaps, and industrial goods

    9

    ACs, motorcycles, refrigerators, luxury items

    14

    Hence, we can see that the maximum rate of CGST is 14%, as per data from October 1, 2019.

    [Source]

    What is SGST?

    The GST collected by the State Government is known as SGST, which is applicable on transactions within its geographical boundaries. Under the new tax regime, previous state taxes like entertainment tax, VAT, and State Sales tax became non-functional. 

    SGST stands for State Goods and Services tax, a single tax levied on intrastate supplies of goods and services, except for alcoholic liquor. It can be charged solely on a product’s transactional value – an amount the buyer needs to pay. 

    SGST features might vary state-wise since each State Government has individual acts. However, specific characteristics like taxable events, valuation, classification of goods and services, and measures are similar across the nation. 

    Thus, this tax embodies the objective of this new tax regime: one tax, one nation.

    Refer to the table below to learn the maximum rate of SGST.

    Products

    SGST Percentage

    Household amenities like tea, sugar, etc. Medicines, coal, and Indian sweets

    2.5

    Processed food items like cheese and bread.

    6

    Capital goods, soaps, toothpaste

    9

    Air conditioners, refrigerators, high-end vehicles.

    14

    [Source]

    What is IGST?

    IGST stands for Integrated Goods and Services tax. It is generally applicable during interstate transactions, i.e., transactions between two different states. Among the types of GST, it’s levied on supplies of products and services between two states and even on exports and imports (IGST + customs). The Central Government is responsible for its collection as per the IGST Act. Let’s simplify this with the help of an example.

    Suppose a manufacturer from West Bengal sells goods to a customer in Maharashtra. In this case, IGST will apply to the transaction value. The Central Government will collect this sum. Later, this amount will be divided between the consumer state – in this case, Maharashtra – and the Central Government. 

    Why does the tax go to the consumer state and not the manufacturing state? Because the buyer incurs the tax. 

    Check the maximum rate of IGST applicable on different goods from the table below.

    Products

    IGST Percentage

    Household products like tea, sugar, etc. Indian sweets and life-saving drugs

    5

    Cheese, bread, other processed food items

    12

    Hair oil, toothpaste, soaps, capital goods

    18

    Luxury items like ACs and refrigerators

    28

    [Source]

    What is UTGST?

    UTGST stands for Union Territory Goods and Services tax, applicable to the transaction of goods and services in the Union Territories. It is levied on the supply of products in Andaman and Nicobar Islands, Lakshadweep, Daman Diu, Chandigarh, and Dadra and Nagar Haveli. 

    Note that UTGST is only applicable on Union Territories without a legislature. 

    Hence, Delhi, Puducherry, and even the newly formed UTs of Jammu & Kashmir are not liable for UTGST but SGST. Simply understanding the UTGST meaning is not sufficient. You must also know the applicable rates.

    This tax is collected by the Central Government and is a substitute for the State Goods and Services tax in UTs. Thus, the UTGST percentage is similar to that of SGST, which are 2.5%, 6%, 9%, and 14%.

    Furthermore, after understanding the types of GST and rates associated with them, it is vital to know that some products are taxed at 0%. Meat from mammals, birds and fish do not draw such a tax. Additionally, sanitary napkins, bananas, apples, and grapes are other tax-free products.

    [Source]

    Benefits of GST

    • Before the GST era, multiple taxes were levied by the State and Central Government. Therefore, regulation of these taxes was quite a hassle. 
    • GST is a convenient and easy-to-follow tax regime.
    • It minimises the chances of tax mix-up between the Central and State Governments.
    • It brought uniformity to the taxation system.

    Therefore, this thorough guide on types of GST will leave no room for future confusion.

    Frequently Asked Questions

    Who are the taxable persons under GST?

    Persons with GST-registered businesses at any location in India are liable to incur taxes under this regime, whether it’s under the forward charge or reverse charge mechanism. It includes e-commerce operators as well.

    Persons with GST-registered businesses at any location in India are liable to incur taxes under this regime, whether it’s under the forward charge or reverse charge mechanism. It includes e-commerce operators as well.

    What is the use of a GST calculator?

    GST calculators are used in calculating the costs of GST applicable on a certain product. These are available on various third-party websites.

    GST calculators are used in calculating the costs of GST applicable on a certain product. These are available on various third-party websites.

    What is a GSTIN?

    Every business is appointed with a unique GST Identification Number known as GSTIN. It is a 15-digit number signifying the state, PAN, and the number of registered enterprises within the state.

    Every business is appointed with a unique GST Identification Number known as GSTIN. It is a 15-digit number signifying the state, PAN, and the number of registered enterprises within the state.

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    Last updated: 20-05-2025

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