CGST (Central GST)

CGST stands for Central Goods and Services Tax.

It is the component of GST collected by the Central Government on the supply of goods and services within a state. It is one of the two simultaneous taxes that together make up the dual GST system in India, the other being SGST. CGST is governed by the Central Goods and Services Tax Act, 2017 and administered by the CBIC (Central Board of Indirect Taxes and Customs). What is CGST? Under India's GST structure, every taxable supply of goods or services is subject to both CGST and SGST (or IGST for inter-state supplies). The CGST rate is equal to half of the total GST rate applicable to that product or service. For example, if a product has an 18% GST rate, the CGST component is 9% and the SGST component is 9%. Both are charged separately on the invoice and appear as distinct line items. CGST collected by the Central Government includes taxes on inter-state supplies, imports, and supplies to union territories. The revenue from intra-state supplies (within a single state) is split between the Centre (CGST) and the State (SGST) equally. For inter-state supplies, the entire GST is collected as IGST (Integrated GST) and then divided between the Centre and the State based on the destination principle. For a business registered under GST, the CGST paid on purchases (input CGST) can be set off against the CGST collected on sales (output CGST). If your output CGST exceeds your input CGST, you pay the difference to the government. If input CGST exceeds output CGST, you claim a refund. This mechanism of input tax credit (ITC) is one of the most important features of the GST system. CGST is administered at the national level by the CBIC, which operates through a network of field offices including the GST Commissionerates, Customs formations, and the GST refund channels. Businesses can file CGST returns (GSTR-1, GSTR-3B) on the GST portal (gst.gov.in) and make payments through the Electronic Cash Ledger. The CGST Act covers the entire supply chain — from manufacturer to consumer — and aims to replace multiple indirect taxes like Central Excise Duty, Service Tax, VAT, and Octroi. The unified GST system eliminates the cascading effect of taxes (tax on tax) by allowing ITC at every stage, ultimately reducing the final cost of goods and services for the end consumer.