GST and CGST both are two separate Tax terms. GST is Goods and Services Tax which was commenced on 1st July 2017 whereas CGST is Central Goods and Services Tax which is a part of GST.CGST falls under the CGST Act of, 2017. GST is a broad concept while CGST is a narrow concept.
GST vs CGST
The difference between GST and CGST is that GST has four components that are CGST, SGST, IGST, and UTGST whereas CGST is only the part of GST for which tax is collected by the central government on Intra State Supplies. GST has subsumed many taxes that are divided into CGST and SGST.
Comparison Table Between GST and CGST (in Tabular Form)
|Parameter of Comparison||GST||CGST|
|Levy of Tax||GST is levied by Central as well as State Governments.||CGST is levied only by the Central Government.|
|Rate of Tax||GST has a rate on goods and services such as 5%, 18%,28%, etc.||CGST is the half of GST rate so it will be 2.5%,9%,14%.etc.|
|Collection of Taxes||Collection of GST is done by both central as well as state Government.||Collection of CGST is only for Central Government|
|Components||GST comprises 4 components namely, CGST, SGST, IGST and, UTGST.||CGST has no components. It is a part of GST.|
|Subsumed Taxes||GST have subsumed all the state as well as central taxes.||CGST has only subsumed the central level of taxes.|
What is GST?
GST is a Goods and Services Tax which was introduced on 1st July, 2017.GST is the value-added tax levied on manufacture, sale, and consumption of goods and services. GST offers a continuous chain of tax credits from the manufacturer’s point or service providers up to the retailer’s level of consumer-level thereby taxed only at each stage of the supply chain on values added.
As GST is paid by the consumer on the purchase of goods and services, he is the final consumer who bears the GST charged by the supplier. He can also avail of credit on the purchase items. GST introduces in India to remove cascading of taxes under the GST system and there will be no tax on tax or dual effect of items.
GST is levied on all goods and services except alcoholic consumption and petroleum crude, diesel, petrol, ATF, and Natural Gas. They will be levied from a date to be notified of the recommendation of the GST council. They will continue to be taxed under central excise duty.
GST have subsumed many taxes from state as well as central they are:
Central Excise Duty, Duties of Excise, Additional Excise Duties, Additional Duties of Customs, Service Tax, State Surcharges, Central Surcharges, Special Additional Duty of Customs, State Cess and Central Cess related to supply of goods and services, State VAT, Central Sales Tax, Purchase Tax, Luxury Tax, Entertainment Tax except those which are levied by local bodies, Entry Tax, Taxes on advertisements and taxes on lotteries, betting, and gambling.
Benefits of GST:
- Now in India there is only one tax for all i.e. GST.
- ITC benefit can be taken from another state in which taxes are paid for purchase of goods or services.
- Removing effect of Double taxation.
- Provided higher threshold for GST Registration.
Transfer of goods from one state to another became easier by having an e-way
What is CGST?
CGST is referred to as Central Goods and Services Tax. It is a tax which is levied and collected by the Central Government on intra-state supplies of goods and services. CGST extends to the whole of India except Jammu and Kashmir. Only the Central Government can collect the taxes under the CGST Act, 2017.
CGST has replaced the following taxes Central Excise Duty, Additional Duty of Excise, Service tax is also subsumed by CGST, Medicinal and Toilet Preparation Act in Excise Duty is also replaced, Counter Veiling Duty (CVD) and Special Countervailing Duty, Central Sales Tax, Central Surcharges and cesses only if it relates to the supply of Goods and Services.
CGST Input Tax can be set off against CGST and IGST can never be set-off against SGST. The Manner to utilize CGST is CGST can be setoff first against CGST and if some balance remains then it will be utilized in IGST. Also IGST first will be utilized against IGST, then if balance remains it will be utilized against CGST and thereafter SGST.
Main Differences Between GST and CGST
- GST is levied by the state as well as the central Government whereas CGST is levied by the only central government.
- GST subsumed all the indirect taxes including state as well as centre, whereas CGST has subsumed only the central level of taxes.
- GST is a broad concept as it includes 4 types of taxes whereas CGST is a narrow concept as it includes only the central goods and services tax act.
- Rate of GST on goods and services is directly charged as 5%, 12%, 14%, and 18% but for CGST it is half of the rate of GST as 2.5%, 6%, 7%, and 9%.
- The collection of GST Amount is divided into state and central. Collection of CGST and IGST amounts are collected by the Central government.
GST comes into effect from 1st July 2017 to remove the duplication of taxes in India. Earlier there were many indirect taxes levied by both state and central government. Every state had different rules and regulations for collecting taxes. Whereas Central Sales Taxes (CST) was collected by the central government.
This was creating an overlapping of taxes levied by both the government. So to improving our economy and removing the tax on tax system GST was implemented. CGST is governed by the CGST Act, 2017 in which it has removed all the central levels of taxes except alcoholic liquor for human consumption and petroleum products. The main benefit of GST is that one can take ITC paid on another state on the purchase of goods and services.