Three types of taxes have been proposed under GST i.e. IGST, CGST & SGST/UTGST. Where the IGST would be levied on certain transactions and on certain other transactions the CGST & SGST/UTGST would be levied in combination. The UTGST is applicable in place of SGST where the supplies are with in Union Territories like Chandigarh etc.
Under the GST regime, an Integrated GST (IGST) would be levied and collected by the Center on inter-State supply of goods and services. Under Article 269A of the Constitution, the GST on supplies in the course of inter-state trade or commerce shall be levied and collected by the Government of India and such tax shall be apportioned between the Union and the States. Even on import of services and Goods the IGST would be levied. So, for all the international inward supplies whether for Goods or Services the IGST would be applicable.
The supplies that are happening with in India and are of intra-state in nature the taxes would be levied in the combination of CGST & SGST. The IGST tax rate that is prescribed for any item/services would be equally divided in two parts and would be levied as CGST & SGST. For example, if the rate for consumer durables items like refrigerator is 18% then for all interstate supplies the IGST would be applicable @ 18% and for intra state supplies of refrigerator the CGST @ 9% + SGST @ 9% would be applicable.
The intra-state supplies are the supplies that is happening with in the state & Union Territories. For example, a Seller who is based in Rajkot (Gujrat) supplies to a buyer based in Baroda (Gujrat), the supply so made with in the state would attract CGST & SGST. If the Seller and buyer both in the Union Territory than the CGST & UTGST would be applicable. For example, if buyer and seller are making the supplies are both based in Chandigarh, the supply would attract CGST & UTGST. Hence the CGST with the combination of either SGST or UTGST would be applicable on the intra-state or intra-UT (Union Territory) supplies.
So, it is important that the transactions would be identified correctly for applying what sort of tax is applicable i.e whether IGST/CGST-SGST. There are some good GST enabled accounting software (www.alignbooks.com) are available in the market that could itself determined the applicability of relevant tax type on the supplies, on the basis of place of vendor and buyer and/or place of supply.
The relevance of correct tax type in invoice is of utmost importance for paying further tax after adjustment of input tax credit with output tax liability as per rules defined in this regard. The rule suggests that SGST/CGST output liability could be adjusted with IGST or vice versa. However, the SGST output liability could be adjusted with SGST inputs and not with CGST and reverse is also stands true for CGST.