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  • Features of SGST
  • Applicability of SGST
  • Intra-State Supply
  • Inter-State Supply
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What is SGST ?

SGST is one of the components of GST in India. SGST is an indirect tax levied and collected by a State Government on the intra-state supplies. Such supplies do not include alcoholic liquor for human consumption. Furthermore, this tax levy is governed by the State Goods and Services Tax (SGST) Act , 2017. And such  a tax is levied on the transaction value of the goods or services supplied as per section 15 of the SGST Act. The transaction value is the price actually paid  or payable for the said supply of goods or services. Also, the liability to pay SGST shall arise at the time of supply of goods or services as specified in sections 12 and 13 of the SGST Act. In addition to this,  along with SGST, CGST will also be levied on the same intra-state supply of goods. But CGST will be governed by the CGST Act, 2017.

Features of SGST

SGST is levied and collected by the states on all goods and services supplied for a consideration. State GST is deposited to the accounts of the respective state Each state has its own SGST act. However, the basic features of the GST law like chargeability, valuation, taxable event, measure, classification etc  would  remain uniform across the respective act of each state SGST, however, is not applicable on the exempted goods and services as they are kept out of the purview of GST. Furthermore, SGST is also not applicable where  aggregate annual turnover is less than the prescribed limit.

Applicability of SGST

The applicability of SGST/UTGST and other tax components like IGST and CGST under GST depends on the nature of supply in a given transaction. There can be two  types of supply:

(i) Intra-State Supply and (ii) Inter-State Supply.

Intra-State Supply

Intra-State Supply refers to any supply where the location of the supplier and the place of supply are in the same State or Union Territory. In case of such a supply of goods and services, a seller has to collect both CGST and SGST. After collecting both the taxes, the CGST part gets deposited with the Central Government. And the SGST portion gets deposited with the respective State Government. Say, for example, Omkar Enterprises, a manufacturer in Punjab, supplies goods to Vipul Traders, a dealer in Punjab. Goods worth Rs 1,00,000 are supplied by Omkar Enterprises after adding GST @ 18%. Since it is an intra-state supply, GST gets deposited to both Central and State Governments. But the total GST  amounting to Rs 18,000 gets deposited equally into separate heads. This means Rs 9,000 gets deposited into the CGST account. And another Rs 9,000 gets  deposited into SGST head.

Inter-State Supply

Inter-State Supply refers to any supply where the location of the supplier and the place of supply are in:

Two different States

2 Different Union Territories

A-State and a Union Territory

Additionally, any supply in a taxable territory, that is not an Intra-State supply is deemed to be an Inter-State supply. The following supplies are also treated as Inter-State supplies:

Supplies to or by Special Economic Zones (SEZs)

Goods or services imported to India

Services or goods exported outside India

Supply of goods or services to international tourists

Thus, on the Inter-State supply of goods or services, only IGST is levied and collected by the Central Government:

For instance, Prakash Ltd, a manufacturer in Punjab, supplies goods to Verma Traders, a dealer in Maharashtra. Goods worth Rs 1,00,000 are supplied by Prakash Ltd after adding GST @ 18%. Since it is an inter-state supply, GST gets deposited only to the Central Government. Therefore, total GST amounting Rs 18,000 gets deposited into CGST head only.

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