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The full form of SGST is State Goods and Service tax. Under Goods and Service Tax or GST, there are three main categories namely SGST, IGST, and CGST. It carries the main concept of tax throughout the nation. This tax falls under the 2016 Act of State Goods and Government Taxes. Some common areas that are not included under SGST involve human consumption of alcohol. This tax also comes under the SGST Act of 2017. The levying of this tax is done according to the SGST Act’s section 15.
Why the concept of GST was introduced?
There were many reasons why the concept of GST was introduced. GST was introduced on July 1st, 2017. Several indirect taxes were levied by the center and the state before the introduction of GST. Interstate goods sale was taxed as CST (Central State Tax) by the center. Further, each state in India followed different regulations and rules which was a major problem. Moreover, several additional taxes such as octroi, local tax, and entertainment tax were present which were all eliminated by GST. The presence of all the different scattered taxes led to lacking uniformity in taxation. Further, it led to a major impediment to the country’s interior trade. It further resulted in tax mixing between State and Centre governments which are often used by the Government.Â
SGST features
The tax of SGST has several features. These features will be outlined in the following.
- SGST is collected and levied on all services and goods supplied by the state under consideration.Â
- Under the Department of State Services and Goods, each state has a specific SGST Act. But the basic GST law features are the same for all the states. These laws involve taxable events such as valuation, measure classification, taxable events, etc.
- The collected tax is deposited into the accounts of each respective state.Â
- SGST is not particularly applicable over the exempted services and goods as they come under the impact of GST. Moreover, SGST is not applicable when the annual aggregate turnover is less than the limit that has been prescribed.Â
Example of SGST
Within GST the prospect of SGST is one kind of tax that is levied on the supplies of Intra State on both services and goods by each state government and will be regulated by the Act of SGST. An example can be provided as follows. Let Shivam is a dealer in Gurgaon who sells goods worth Rs 20,000 to Satabdi in Bangalore. The rate of GST is 18% which is inclusive of the 9% CGST rate as well as the 9% SGST rate. In this case an amount of Rs. 3600 will be collected by the dealer which Rs 1800 will go to the Haryana Government whereas Rs 1800 will go to the central government.Â
Intra-State Supply
When discussing SGST, Intra State Supply is a major aspect. Intra-State supply is known as any supply in which the supplier, as well as the place of supply, exists within the same Union territory. In such a case of services and goods supply a seller needs to collect both SGST and CGST. Once both SGST and CGST are collected, the amount of CGST gets deposited within the Central Government and the amount of SGST gets deposited in their respective State governments. This can be understood through an example. Gunjan Enterprises is a manufacturer within Rajasthan. They supply their goods to Monohor Traders who is a dealer within Rajasthan. Gunjan Traders supply goods of Rs. 2,00,000 after adding 18 percent GST. It is an Intra State supply, the GST is deposited by both State and Central governments. However, the total GST of Rs 36,000 gets deposited to both heads separately. This means a total of Rs 18,000 gets deposited within the SGST account whereas a total of Rs.18000 gets deposited within the CGST account.Â
Conclusion
The whole article has been carried out to answer one main question what is SGST? For this, it has been seen that the full form of SGST is State Goods and Service Tax. Learning all aspects of this topic is particularly beneficial as many questions are given from this area in the UPSC exams. The core topic of SGST has been further discussed through discussion firstly discussing why the concept of SGST was introduced in the first place, different features of SGST, and Examples of SGST and Intra State Supply.
