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Introduced on 1 July 2017, the Goods and Services Tax (GST) subsumed the majority of indirect taxes with the aim of streamlining taxation for businesses, consumers, and various government departments. In this guide, we cover the different types of GST and how they apply to you, helping you stay compliant with tax laws.
India has multiple types of GST to enable efficient tax collection for different transaction categories, aligned with the country's dual governance structure. This setup ensures transparent taxation, supports both state and central government autonomy, and minimizes double taxation and compliance challenges for businesses and consumers.
Goods and Services Tax in India is divided into four categories to ensure fair distribution of revenue between the Centre and the states. Each type applies to a specific transaction scenario, as outlined below.
Central Goods and Services Tax (CGST) is levied by the Central Government on the supply of goods and services within a state. It replaced multiple earlier taxes, such as service tax, central excise duty, and certain customs duties.
State Goods and Services Tax (SGST) is collected by the respective state government on the supply of goods and services within that state. It is charged alongside CGST, with the revenue going directly to the state’s account. SGST has replaced various state-level levies, including VAT, luxury tax, entry tax, and entertainment tax.
This type of tax applies to the supply of goods and services in Union Territories without a legislative assembly. UTGST directs revenue from these transactions to the Union Territory administration, supporting local governance and service provision.
The Integrated Goods and Services Tax (IGST) is charged on the interstate supply of goods and services, including imports and exports. This tax streamlines compliance by requiring businesses to file a single tax return for interstate transactions. This allows businesses to claim input tax credit to reduce the overall tax burden. IGST maintains uniform taxation and facilitates the smooth movement of goods and services across state boundaries.
When you buy goods or services, the GST you pay depends on whether the transaction occurs within your state, across states, or in a Union Territory. The following scenarios illustrate how different types of GST apply in practice:
Both CGST and SGST are levied. For example, if you purchase a washing machine in Bengaluru from a local store, the bill will show CGST and SGST charged in equal proportion.
IGST is applied. For instance, if you order the same washing machine online from a seller in Mumbai while residing in Bengaluru, IGST will be charged on the invoice.
Both CGST and UTGST are levied. For instance, when shopping at a retail store in Andaman, the final bill will reflect CGST and UTGST.
When a service such as consultancy or digital subscription is supplied from one state to another, IGST is applicable, as the place of supply and the consumer’s location differ.Open a DBS Bank Account Now
The table below provides a simplified view of how each type of GST is applied, who collects it, and practical examples for consumers.
Type
Applicable Scenario
Tax Collected By
Consumer Example
CGST
Purchase of goods or services within a state
Central Government
Buying a television in Delhi
SGST
State Government
UTGST
Purchase of goods or services within a Union Territory
Union Territory Administration
Dining at a restaurant in Puducherry
IGST
Purchase of goods or services across state or Union Territory boundaries
Central Government (shared with the destination state/UT)
Ordering a television online from Mumbai to Delhi
The Goods and Services Tax framework in India has undergone several changes aimed at simplifying the system and reducing the burden on consumers. The most recent reforms focus on rationalising tax slabs, making essentials more affordable, and streamlining compliance.
These changes take effect from 22 September 2025, ensuring that both households and businesses benefit from a simpler and more transparent GST structure. The reduced GST burden on essentials leaves households with greater disposable income, which can be set aside in a Savings Account to build financial security.
GST in India is designed to create a unified tax system while ensuring both the Centre and states receive their fair share of revenue. For consumers, knowing which type of GST applies helps in understanding bills and purchase costs. With recent reforms lowering rates on essentials, the system has become simpler, more transparent, and aligned with everyday needs. Consumers can also direct the savings made into financial planning by choosing to open a savings account online for security and growth.Open a DBS Bank Account Now
