UTGST full form – Union Territory Goods and Services Tax, is charged by the Union Territory governments in the same way that SGST is levied by state governments on intra-state sale of goods and services. It is a tax placed on products and services supplied within the Union Territory. The UTGST Act governs it, and it is levied in tandem with the CGST.
UTGST is a tax collected in Union Territories that do not have their own legislature, analogous to SGST. The Union Territory of Andaman and Nicobar Islands, Chandigarh, Dadra and Nagar Haveli, Daman and Diu, and Lakshadweep are all subject to the UTGST.
Union Territories of Delhi and Puducherry, which have their own legislature, would be subject to the SGST. The order in which ITCs are used in UTGST is similar to that of SGST. UTGST’s ITC should be offset against UTGST first. Any residual amount can be used to offset any IGST liability.
Applicability of UTGST
Only those union territories with their own governing body are covered under the UTGST Act. The following is a list of the Union Territories to which the UTGST Act applies:
- Andaman & Nicobar Island
- Daman & Diu
- Dadra & Nagar Haveli
There are two union territories with legislatures at the moment: Delhi and Puducherry. There is a specified legislature and an elected government in these types of union territories. As a result, SGST applies to these states.
The remaining union territories are under the administration of the federal government. A Lieutenant Governor serves as the executive of Union Territories that are presently ruled by the Central Government. Unlike Gst no format, UTSGT cannot be identified using a 15 digit number. He is the President of India’s representative, selected by the central government. These UTs are governed by the UTGST Act.
Why was UTGST needed?
The GST council’s major agenda item was that the benefits of Union Territory GST will be the same as those of SGST. Apart from that, the SGST laws will continue to apply to New Delhi and Puducherry. Both states have their own legislatures and are deemed states by the GST Council.
They can operate freely under the conditions of the SGST. The rates of the Union Territory Goods and Services Tax are identical to those of the State Goods and Services Tax. As a result, the UTGST rates are 0%, 5%, 12%, 18%, and 28%, respectively. In addition, the exemption regulations for goods and services are comparable to those of the SGST.
The Central Government has the authority to define which categories of goods and services would be subject to Reverse Charge Taxation. In other words, under Reverse Charge, the recipient of goods and services would be required to pay the tax, and all provisions of the UTGST Act would apply to him as if he were obligated to pay UTGST on the supply.