The Goods and Services Tax (GST) in India is divided into two parts – Central Tax and State Tax. This dual tax structure ensures that both the Central Government and State Governments receive revenue for development and administration.

1. Central Tax (CGST & IGST)

• CGST (Central Goods and Services Tax): Applied on intra-state supplies (within the same state) and collected by the Central Government.
• IGST (Integrated Goods and Services Tax): Applied on inter-state supplies (between two different states/UTs). Collected by the Central Government and later shared with states.

Example: A product sold from Delhi to Maharashtra attracts IGST, collected by the Centre.

2. State Tax (SGST & UTGST)

• SGST (State Goods and Services Tax): Applied on intra-state supplies and collected by the State Government.
• UTGST (Union Territory GST): Levied in Union Territories (e.g., Chandigarh, Andaman & Nicobar) instead of SGST.

Example: A product sold within Karnataka attracts both CGST + SGST.

3. Key Differences Between Central Tax and State Tax

Conclusion

Understanding the difference between Central Tax and State Tax is crucial for businesses and consumers to ensure GST compliance and clarity in pricing.