CGST Full Form, Features & Benefits

October 24, 2025
Registrationwala

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CGST Full Form, Features & Benefits

CGST Full Form, Features & Benefits

October 24, 2025

Registrationwala

CGST full form is Central Goods and Services Tax. It is a type of indirect tax under the Goods and Services Tax (GST) System in India. The CGST is applicable on goods and services that are traded within the same state. In this blog post, we shall explain what CGST is, its features, benefits and more.

What is CGST full form?

CGST full form is Central Goods and Services Tax. This tax is imposed by the central government on the intrastate supply of goods and services. To put it simply, when a good or service is sold within the same state, both CGST and SGST (State Goods and Services Tax) are charged.

While SGST is collected by the respective state government, CGST ensures that the central government receives its share of revenue. The levy and collection of CGST are governed by CGST Act, 2017 and provisions made thereunder. This Act gets amended from time to time.

Salient Features of CGST

Below, we have explained the salient features of CGST:

When goods or services are bought and sold within the same state, CGST represents the central government’s share of the tax applied on that transaction.
The goods and services tax framework enables the businesses to claim input tax credit. This means the tax paid on purchases can be set off against the tax due on sales. This helps avoid double taxation and reduces overall costs for the businesses.
CGST works on a self-assessment model. In this, taxpayers are required to calculate and pay their own tax liabilities.
The CGST law provides for audits to ensure that businesses comply with all tax rules and regulations.
If a CGST default occurs, the government can recover the unpaid tax along with any applicable interest and penalties via demand and recovery mechanisms.
To keep the system strict and efficient, penalties and fines are charged in case of any delays in filing returns or depositing taxes.

Benefits of CGST

The benefits of Central Goods and Services Tax are as follows:

With the introduction of CGST, numerous taxes like Central Excise Duty, Service Tax and additional customs duties were subsumed. This made compliance easier and simpler for the businesses.
CGST eliminates the cascading effect of taxes. Because of Input Tax Credit concept, the businesses can reduce the tax they pay on their sales by claiming a credit for taxes they have already paid on their business purchases.
For the Central Government, CGST improves revenue collection by consolidating multiple central taxes.
CGST’s introduction reduced the administrative burden and costs associated with managing several tax categories.
Central Good and Service Tax creates a national common market by eliminating the multiple state-level taxes applicable earlier and harmonizing tax structures throughout India.

How is CGST Applied: Practical Example

The CGST is levied by the Central Government only when the supply of goods or services takes place within the same state. In such cases, the applicable goods and services tax rate is divided equally among the CGST and SGST.

Example

Here is a practical example of how CGST is applied:

Suppose an item sold in Karnataka carries 18% GST, then this GST will be split in the following manner:

9% CGST: This tax will be collected by the Central Government.
9% SGST: This tax will be collected by the Maharashtra State Government.

Therefore, the buyer must pay 18% GST. However, the revenue will be shared between the central government and Karnataka state government.

Conclusion

The full form of CGST is Central Goods and Services Tax. It is a type of indirect tax within the GST system. For levying and collecting CGST, the Central Government is responsible. Along with CGST, SGST is also imposed. However, the State Government is responsible for collecting SGST.

Need assistance in GST return filing? Connect with our GST consultants at Registrationwala!

Frequently Asked Questions (FAQs)

Q1. What is CGST full form?

A. CGST full form is Central Goods and Services Tax.

Q2. Who is responsible for levying CGST?

A. The Central Government is responsible for levying CGST.

Q3. Which Act governs CGST in India?

A. Central Goods and Services Tax Act 2017 (CGST Act) is the primary Act that governs CGST in India.

Q4. Which taxes were replaced by CGST?

A. CGST replaced numerous central indirect taxes like Central Excise Duty, Service Tax, Additional Duties of Customs and Central Surcharges and Cesses pertaining to the supply of goods and services.

Q5. Is CGST an indirect tax or a direct tax?

A. CGST is an indirect tax. This is because the final burden is borne by the consumer and it is collected and paid to the government by businesses.

Q6. On which supplies is CGST applicable?

A. CGST is applicable on the intrastate supplies i.e., when both the supplier and the place of supply are in the same state or union territory.

Q7. Are CGST and SGST divided equally?

A. Yes, CGST and SGST are divided equally. If a product is subject to 18% GST, then out of this, 9% CGST is collected by the central government and the remaining 9% is collected by the state government.

CGST Full Form, Features & Benefits