CGST, SGST & IGST are the three pillars of goods & service tax (GST).

Good and Service Tax (GST) is an Indirect tax which came into effect on July 1, 2017. GST was introduced to replace the hassle of multiple taxations in India under the slogan, “One Nation, One Tax”. Prior to the GST regime, a taxpayer was required to file forms such as Central Excise, Service Tax and State VAT etc.

Although GST is structured as One-multistage based taxation system, it is categorized into CGST, SGST or IGST, based on whether the transaction is Intra-State or Inter-State.

Applicability of CGST, SGST and IGST

To determine the applicability of Central Goods & Services Tax (CGST), State Goods & Services Tax (SGST) or Integrated Goods & Services Tax (IGST), it is crucial to know if the transaction is an Intra State or an Inter-State supply.

• • Intra-State Supply: When the location of the supplier and the place of the supply or the location of the buyer are in the same state, it is known as the Intra-state transaction. For the intra-state transaction, the seller is required to collect both CGST and SGST from the recipient, which is deposited to the central and state government respectively.
  • Inter-State supply: When the location of the supplier and the place of the supply or the location of the buyer are in different states, it is known as the Inter-state transaction. Moreover, in case of import or export of goods/services is made by the SEZ unit, the transaction is considered as Inter-state. For the inter-state transaction, the seller is required to collect IGST

Need of splitting GST into CGST, SGST and IGST

In India, the Central Government, as well as the State Government, have the authority to levy and collect the tax. Furthermore, both the Governments have their own distinct responsibilities to perform, as per the Constitution, for which the revenue generated through tax is necessary.

Thus, to ensure a smoother and co-operative revenue generation, the three types of tax structure i.e.

1. CGST: Under GST, CGST is a tax levied on Intra State supplies of both goods and services by the Central Government and will be governed by the CGST Act.
2. SGST: Under GST, SGST is a tax levied on Intra State supplies of both goods and services by the State Government and will be governed by the SGST Act. Note: Any tax liability obtained under SGST can be set off against SGST or IGST input tax credit only.
3. IGST: Under GST, IGST is a tax levied on all Inter-State supplies of goods and/or services and will be governed by the IGST Act. IGST will be applicable on any supply of goods and/or services in both cases of import into India and export from India.

Note: Under IGST the following have been implemented:

• Exports would be zero-rated supplies.
• The tax will be shared between the Central and State Government.

Best software to reconcile GST data faster and ensure 100% compliance – IRIS GST Software

As a registered taxpayer, reconciling your purchase invoices with the supplier-uploaded invoices on the GST system is a critical activity as it determines your ITC claim. Further, the Government issues legal notices to taxpayers for discrepancies in the ITC claimed in GSTR 3B and the amount as per supplier uploaded details. Our Smart GST Reconciliation comes in handy for managing reconciliation tasks in a timely, efficient and easy manner.

Feature Highlights:

1. Bulk Data upload facility – It will help you to upload data for multiple GSTINs in one go
2. 2P Summary – Provides a summary of uploaded data. You can quickly check your uploaded data with the count of invoices getting considered for reconciliation
3. Bulk download of GSTR 2A – For multiple periods, you can send ’Get GSTR 2A data’ request in one go
4. Smart reconciliation – It auto-runs on your data and provides you the reconciliation results with summary
5. Advanced reconciliation – It helps you to extend the scope of comparison between data that is in the supplier-only and purchaser-only category. Some rules that help in better reconciliation are :
   1. Checking invoices across the financial years
   2. Fuzzy invoice no. logic
   3. Checking exact values ignoring invoice number
   4. Checking invoices within the tolerance provided by you
6. Monthly reconciliation results with monthly GSTR 2A report – Helps you to decide monthly ITC and how much you can claim as provisional ITC
7. Net vendor summary – It gives you a glance reconciliation status for each vendor
8. PAN level reports and GSTIN level reports – It will help you to analyse in detail of your purchaser-only and supplier-only invoices Send Mail – By using this feature you can easily communicate discrepancies to your vendor

To have your GST queries solved and to know more about our solution, please contact us at support@irisgst.com.