SGST stands for State Goods and Service Tax, which is a crucial component of the Goods and Service Tax (GST) system. The concept of one tax one nation is what makes it all the more intriguing. Under the State Goods and Service Tax Act 2016, SGST is one of the three significant categories of GST, along with CGST and IGST.
Did you know that alcohol for human consumption is excluded from the supplies under SGST? Also, this levied tax comes under the State Goods and Services Tax (SGST) Act, 2017, and is governed by the same. The value of the transaction, which refers to the price paid or payable for the goods or services supplied, is the basis for levying this tax.
What’s interesting is that this tax is collected by the State where the goods or services are consumed, and not by the state where the goods are manufactured. In this blog, we’ll delve deeper into the intricacies of SGST, its applicability, and how it impacts businesses and consumers alike.
Benefits Of SGST
As a GST-registered business, you can avail several benefits that will make running your business smoother and easier. Not only will compliance with GST norms make it easier to secure a business loan, but it will also help with growth and expansion opportunities.
With SGST, businesses can enjoy a straightforward tax structure that eliminates the need to pay a total of 17 different taxes. The GST tax laws are clearly spelt out, making it simple for manufacturers and consumers alike to comply.
In addition, the online procedure for filing tax returns is straightforward and can be taken care of by any computer-savvy business owner. The transparency of the tax structure helps to reduce red-tapism and the scope for corruption, making it easier to do business honestly.
So if you’re a business owner looking for an easy way to comply with tax laws and secure growth opportunities, consider registering for GST and availing of the benefits it provides. And if you need additional financial support, check out Bajaj Markets for flexible repayment tenures, zero collateral, and minimal paperwork for business loans. It’s never been simpler!
How is SGST Charged?
Let’s say a baker from Bangalore sells a batch of cupcakes for ₹1,000 to a customer in Chennai. The SGST applicable in Tamil Nadu is 9% while the CGST is also 9%. Therefore, the baker needs to pay ₹90 as SGST and ₹90 as CGST.
Now, if the customer from Chennai decides to resell those cupcakes to a customer in Kerala for ₹2,000, the reseller will have to pay 18% IGST on the actual price of the cupcakes, which is ₹1,000. That comes out to be ₹180, which will be paid to the central government as IGST.
Being GST-compliant is crucial for any business in India as it simplifies the tax structure and brings transparency to the system. It can make a significant difference to a business and can even boost its growth. Moreover, it can help an entrepreneur get access to business loans, which can be personalised and flexible for both MSMEs and start-ups. By complying with GST norms, businesses can enjoy the benefits of a streamlined tax system, making it easier to focus on growing and expanding their operations.
Difference Between CGST and SGST
| Category | SGST | CGST |
| Tax Components | SGST includes taxes such as VAT, state sales tax, gambling and betting tax, entertainment tax, lottery tax, and surcharges related to the supply of goods and services. | CGST is applicable to the manufacture of goods in the form of central excise duty, interstate sale of goods in the form of central sales tax, and certain services provided in the form of service tax under previous taxation laws. |
| Share of Tax Revenue | The share of tax revenue collected under SGST is determined by the respective state government. | The share of tax revenue collected under CGST is determined by the central government. |
| Usage of Input Tax Credits | A merchant or seller can use input tax credit against SGST or IGST, but cannot apply a credit of SGST against CGST. | A merchant or seller can use input tax credit against CGST or IGST, but cannot apply credit of CGST against SGST. |
How Frequently are SGST rates revised?
Since the Goods and Services Tax (GST) was introduced, there have been several revisions made to the GST rates. The most recent rate revision was implemented on 14th March 2020 during the 39th GST Council Meeting. Additionally, there have been other meetings held by the GST Council to discuss further rate revisions. For detailed information about the various types of GST and the revisions made to their rates, one can visit the official website at https://cbic-gst.gov.in/.
