What is CGST?

CGST is abbreviated as Central Goods and Service Tax and major share of tax revenue collected under CGST is for the Central Government. The GST (Goods and Services Tax) levied by the Central government on Intra-State supply or movement of goods and services is known as Central GST (CGST). Input Tax Credit (ITC) on Central GST is given partially to the Central government and partially to the State government as it will be utilized against the payment of both CGST and IGST. Follow the example given below to know how the taxes would be collected by both the Central and State government.

Consider a product of worth Rs. 10,000 is sold by manufacturer A in Maharashtra to Dealer B in Maharashtra. The GST rate of 18% is comprised with both CGST rate of 9% and SGST rate of 9%, However the dealer collects Rs. 1800 where Rs. 900 will go to the central government and Rs. 900 will go to the Maharashtra government.