SGST Full Form, Features & Advantages

SGST full form is State Goods and Services Tax. It is an indirect tax under the GST system. The SGST applies on goods and services that are traded within the same state. 

Along with SGST, CGST is also applied on such goods and services. In this blog post, we shall explain what is SGST, its key features, advantages and more.

What is SGST Full Form?

SGST full form in GST is State Goods and Services Tax. It is an indirect tax because it is ultimately borne by end consumer while the responsibility of collecting and remitting this tax lies with the seller. SGST is applicable on intrastate supply, i.e., the supply of goods and services within the same state. 

SGST and CGST are always charged at an equal rate on intrastate transactions. So, if 18% GST is charged on a goods/services supply in Maharashtra, then 9% will be levied as CGST and 9% as SGST. 

The State Government levies the SGST tax portion. On the other hand, the Central Government levies the CGST tax portion. 

Key Features of SGST

Here are some of the key features of State Goods and Services Tax:

• SGST is a tax under the GST system that abolished various taxes like Value Added Tax, entertainment tax, luxury tax and entry tax.

• The SGST is applicable on intrastate supply only, and not on interstate supply. This means that when the buyer and seller are located in the same state, only then does SGST get levied.

• Along with SGST, CGST is also charged on the good/service. The SGST and CGST are always split equally for transactions that occur within the same state.

• The State Government levies the SGST. The seller is responsible for collecting this tax from the buyer and then depositing it with State Government.

• SGST lets the eligible businesses claim Input Tax Credit for the SGST paid on their purchases. 

Advantages of SGST

Here are the advantages of SGST tax:

• One of the main advantages of SGST is that it prevents the cascading effect of taxes by enabling input tax credits.

• Another key advantage that SGST has is that it makes tax structure simpler and more efficient by eliminating multiple taxes.

• It creates a transparent online system that helps to curb tax evasion in the country.

• Because of SGST, the revenue increases for the states. As a result, the state governments can use the revenue for the welfare and development of their states.

How is SGST Applied: Practical Example

The SGST is imposed by the State Government on transactions where goods or services are supplied within the same state. In such cases, the overall GST rate is evenly split between CGST and SGST.

Example of how SGST works

Here is an example to help you understand how SGST works:

Imagine an item sold in Maharashtra attracts 18% GST. This tax will be divided as follows:

• 9% CGST: This tax portion goes to the Central Government

• 9% SGST: This tax portion goes to the Maharashtra State Government

So, the buyer pays 18% GST in total and this GST amount is shared between Central and State Government.

Conclusion

SGST stands for State Goods and Services Tax. It is levied by the State Government on the intrastate supplies of goods and services (i.e., when the goods and services are supplied within the same state). This tax has streamlined and improved tax collection in various states across India. Along with the SGST tax, CGST tax is also charged. Both these taxes are split equally. However, unlike SGST, CGST is levied by the Central Government. 

Need assistance in GST registration or GST returning filing? If yes, then connect with our GST consultants at Registrationwala as soon as possible! Whether you need assistance in GST registration or in returning filing, we’ll help you out in a smooth and hassle free manner! 

Frequently Asked Questions (FAQs)

Q1. What is SGST full form?

A. SGST full form is State Goods and Services Tax.

Q2. Does SGST apply to interstate goods and services?

A. No, SGST applies to intrastate goods and services. In case of interstate goods and services, IGST is applicable.

Q3. Who levies SGST tax?

A. The State Government levies SGST tax, as opposed to CGST tax, which is levied by the Central Government.

Q4. Which tax is charged along with SGST?

A. Along with SGST, CGST is also charged. While the SGST goes to the state government, the CGST goes to the central government.

Q5. Can businesses claim Input Tax Credit on SGST?

A. Yes, businesses can claim Input Tax Credit on the SGST paid on their purchases. 

Q6. Is the SGST tax applicable on intrastate supplies?

A. Yes, the SGST tax is applicable on intrastate supplies. 

Q7. Who collects the IGST?

A. The Central Government collects the IGST. 

Q8. Is GST registration required to claim input tax credits?

A. Yes, GST registration is required to claim input tax credits.

Q9. What is the purpose of filing the GST ITC-01 form?

A. The GST ITC-01 is filed by newly registered businesses for the purpose of claiming input tax credit under GST.

Disclaimer: We have made every effort to provide accurate and up-to-date information in this article. However, we do not guarantee the completeness or accuracy of the information. This content is for informational purposes only and should not be treated as business, legal or financial advice.

Author: Dushyant Sharma

Hey there, I'm Dushyant Sharma. With the extensive knowledge I've gained in past 8 years, I have been creating content on various subjects such as banking, insurance, telecom, and all the important registration and licensing processes for various companies. I'm here to help everyone with my expertise in these areas through my articles.