Question

Differentiate between CGST and IGST.

Hint:

CGST is charged on sales inside a state and is half of the GST rate. IGST is charged on sales between states and is the full rate.

Answer 1

Step 1: Meaning of CGST and IGST:
CGST (Central Goods and Services Tax) is the part of GST that the Central Government collects when goods or services are supplied inside one state.
IGST (Integrated Goods and Services Tax) is the GST that the Central Government collects on supplies between two states and on imports.

Step 2: Difference on the basis of supply:
CGST applies only to intra-state supply, for example a sale from Jaipur to Kota.
IGST applies to inter-state supply, for example a sale from Jaipur to Delhi. It also applies to imports and exports.

Step 3: Difference on the basis of rate:
On an intra-state sale, the total GST rate is split in two equal halves. CGST is one half and SGST is the other half. At 18% GST, CGST is 9%.
IGST is charged at the full GST rate. At 18% GST, IGST is 18%.

Step 4: Difference on the basis of revenue and credit:
The full CGST amount goes to the Central Government. IGST is collected by the Centre and then shared with the state where the goods are finally consumed.
CGST is always charged together with SGST (or UTGST). IGST is charged alone.
Credit of CGST can be used to pay CGST and IGST, but not SGST. Credit of IGST can be used to pay IGST first, then CGST, then SGST.

Final Answer:
CGST is levied on intra-state supply at half of the GST rate and goes to the Centre. IGST is levied on inter-state supply and imports at the full rate and is shared between the Centre and the destination state.