2020-03-31 11:51:14GST CenterEnglishUTGST refers to a tax that is levied on intra-state supply of goods and services together with tax charged under CGST Act, 2017.https://quickbooks.intuit.com/in/resources/in_qrc/uploads/2020/03/UTGST-Full-Form-Meaning-and-Applicability-of-UTGST.jpghttps://quickbooks.intuit.com/in/resources/gst-center/utgst/UTGST: Full Form, Meaning and Applicability of UTGST

UTGST: Full Form, Meaning and Applicability of UTGST

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Union Territory Goods and Services Tax (UTGST) is covered under Union Territory Goods and Services Tax Act, 2017. UTGST Act, 2017 applies to Union Territories that are mentioned in Schedule I of the Constitution of India. As per this Schedule, India constitutes 29 States and 7 Union Territories.

UTGST Act is passed by the Parliament. However, it is administered by an Administrator appointed for the Union Territory (UT). Each UT is governed by the President via an Administrator appointed by him. Such an Administrator further has the power to appoint Commissioners and other Officers so as to implement UTGST and meet its purposes.

In this article, you will learn UTGST meaning, its applicability, UTGST Rates and other provisions in respect of the UTGST.

UTGST Meaning

As per UTGST Act, 2017, Union Territory Goods and Services Tax refers to a tax that is levied on intra-state supply of goods and services together with tax charged under CGST Act, 2017. These goods and services do not include supply of alcoholic liquor for human consumption.

Furthermore, it is charged at a rate not exceeding 20% which is notified by the Central Government as per the suggestions given by the GST Council.

In addition to this, UT Tax is collected in a manner as suggested by the Council and is paid by the taxable person under the UTGST Act.

UTGST Full Form

UTGST stands for Union Territory Goods and Services Tax Act, 2017.

UTGST States

The UTGST States to which the UTGST Act, 2017 applies is as follows:

  • Andaman and Nicobar Islands
  • Lakshadweep
  • Dadra and Nagar Haveli
  • Damn and Diu
  • Chandigarh
  • Other territory

As per Schedule I of the Constitution of India, the territory of India consists of States and Union Territories. This Schedule provides that there are 29 states and 7 Union Territories.

Out of these 7 Union Territories, 2 UT’s have legislation and the rest 5 UT’s do not have a legislation. Accordingly, Indian territory includes: (i) States – 29, (ii) Union Territories with Legislature – 2, (iii) Union Territories without Legislature – 5.

Furthermore, the Constitution of India provides that every State would have a Legislature, whereas every Union Territory would be regulated by the President via an Administrator appointed by him.

But there is an exception to such a provision. In other words, UT’s of Delhi and Pondicherry have Legislatures that have powers and perform functions which are necessary for their Administration.

Thus, under the GST Law, State is defined as a Union Territory have a legislature. Although Delhi and Puducherry are Union Territories, they have Legislature of their ow. Thus for the purpose of the GST Law, the UT’s of Delhi and Puducherry are taken as a State and therefore are governed by their respective SGST Laws passed by them in place of the UTGST Act so passed by the Central Government.

UTGST Example

Lets understand how UTGST is charged in Union Territories vis-a-vis CGST, SGST and IGST charged on inter-state and intra-state supplies taking place in states.

Say for instance, the following supplies are made and GST rate applicable is 18%.

Sales FromSales ToAmount of SaleType of TaxGST Amount
PunjabPunjabRs 1,00,000CGST+SGST

(Rs 9,000 + Rs 9,000)

Rs 18,000
PunjabMaharashtraRs 1,00,000IGSTRs 18,000
ChandigarhChandigarhRs 1,00,000CGST + UTGST

(Rs 9,000 + Rs 9,000)

Rs 18,000
ChandigarhMaharashtraRs 1,00,000IGSTRs 18,000
MaharashtraChandigarhRs 1,00,000IGSTRs 18,000
ChandigarhUKRs 1,00,000Customs + IGSTCustoms + Rs 18,000

UTGST Act 2017

UTGST is governed by UTGST Act, 2017. This Act was introduced to outline the provisions for levying and collection tax on intra-state supply of goods and services by the Union Territories and all the issues related to the same.

Accordingly, UTGST Act, 2017 contains provisions pertaining to:

  • Levy and Collection of Tax
  • Powers to Grant Exemption of Tax
  • Transfer of ITC
  • Payment of Tax
  • Tax Recovery
  • Transitional Provisions etc.

UTGST Rates

The Central government on the recommendations of the GST Council seeks to amend Union Territory tax rates from time to time. Click here to know the latest amendments in the Union Territory Tax Rates.

Applicability of UTGST

Output Tax liable to be paid by the taxable person under the UTGST Act, 2017 refers to UT Tax liable to be charged under the Act on taxable supply of goods and services made by the taxable person or his agent.

However, this does not include tax that is payable by such a person on a reverse charge basis. Thus, Output Tax to be paid by the taxable person under the UTGST Act can be outlined as follows:

Type of SupplyOutput taxReference
Supplies within a UT without LegislatureUTGST + CGST (intra-State supply)Section 8(1) and 8(2) of the IGST Act
Supplies between two UT without LegislatureIGST (inter-State supply)Section 7(1) and 7(3) of the IGST Act
Supplies between a UT without Legislature and a State (including UT with Legislature)IGST (inter-State supply)Section 7(1) and 7(3) of the IGST Act

Furthermore, since tax paid on reverse charge basis is out of scope of the output tax, the recipient of goods supplied under reverse charge cannot claim ITC for such goods. Therefore, the recipient is required to pay tax on reverse charge through his electronic cash ledger and not electronic credit ledger.

In other words, since ITC can only be used to pay output tax liability, the tax on reverse charge basis would be paid by the way of cash only via electronic cash ledger by depositing cash or cheque towards the same.

How is UTGST Charged?

Levy of UTGST On Forward Charge Basis

As mentioned above, Union Territory Tax would be charged on all intra-state supply of goods and services except the supply of alcoholic liquor for human consumption. Such a tax would be levied on a value as specified under Section 15 of the CGST Act, 2017 and at a rate not exceeding 20%.

The UTGST rates applicable on the supply of various goods and services shall be notified by the Central Government on the suggestions given by the Council. Furthermore, UTGST would be collected in a manner as prescribed by the Council and would be paid by taxable persons under UTGST Act.

Thus, in case of a normal taxpayer, UTGST would be paid to the Central Government by the supplier of goods or services after collecting it from the recipient. This is known as charging tax in the hands of the supplier or tax under forward charge mechanism.

Levy of UTGST on Reverse Charge Basis

The Central Government has the powers to specify certain categories of supply of goods and services on which tax would be paid on Reverse Charge Basis.

In other words, under Reverse Charge, the recipient of goods and services would be liable to pay the tax and all the provisions of the UTGST Act would apply to such a recipient as if he is liable to pay UTGST with regards to such a supply.

Furthermore, an unregistered supplier supplying taxable goods or services to registered person also come under Reverse Charge Mechanism, that is, the registered person in such a case would be liable to pay tax on reverse charge basis as a recipient. And all the provisions of the UTGST Act would apply to such a recipient as if he is liable to pay UTGST on such supplies.

Levy of UTGST In Case of E-Commerce Operator

The Central Government has the powers to mention categories of services for which the tax would be paid by the electronic commerce operator if:

  • such supplies are Intra-State supplies
  • And such services are provided via e-commerce operator

In such a case, the provisions of the UTGST Act would apply to the e-commerce operator as if he is liable to pay UTGST under the Act on supply of such services.

Difference Between CGST, SGST, UTGST and IGST

Criteria of DistinctionCCGSTSGSTUTGSTIGST
Full FormCGST stands for Central Goods and Services TaxSGST stands for State Goods and Services TaxUTGST stands for Union Territories Goods and Services TaxIGST stands for Integrated Goods and Services Tax.
MeaningCGST is another component of GST levied and collected by central government on intra-state supplies. Such a tax levy is governed by the Central Goods and Services Tax Act, 2017.SGST is one of the components of GST levied and collected by the respective state government on intra-state supplies. Such a tax is governed by State Goods and Services Tax Act, 2017.UTGST is one of the components of GST levied and collected by the Central Government on intra-state supplies. Such a tax is governed by Union Territories Goods and Services Tax Act, 2017.IGST is the third component of GST levied and collected by only central government on inter-state supply of goods or services. The tax so collected is then apportioned between Central government and respective State Government where goods are consumed. Such a tax levy is governed by Integrated Goods and Services tax Act, 2017.
ApplicabilityCGST is also applicable in case of intra-state supply where the location of the supplier and place of supply are in the same state or UT.SGST is applicable in case of intra-state supplies where the location of the supplier and place of supply are in the same state or UT.UTGST is applicable in case of intra-state supplies where the location of the supplier and place of supply are in the same UT.IGST is applicable in case of inter-state supply where the location of the supplier and place of supply are in: (i) two different states (ii) two different UTs and (iii) a state and UT.
Taxes ReplacedCGST replaces:

  • Central Excise Duty
  • Service Tax
  • Additional Customs Duty
  • Additional Excise Duty
  • Excise duty imposed under medicinal and toiletries preparation
  • Special additional duty of customs
SGST replaces:

  • VAT (Value Added Tax) or Sales tax
  • Luxury Tax
  • Octroi
  • Entertainment Tax
  • Purchase Tax
  • Tax on betting or gambling or lottery
UTGST replaces:

  • VAT (Value Added Tax) or Sales tax
  • Luxury Tax
  • Octroi
  • Entertainment Tax
  • Purchase Tax
  • Tax on betting or gambling or lottery
Who Collects the TaxCGST is collected by the Central government.SGST is collected by the respective state government.UTGST is collected by Central Government in case of UT without Legislature and the respective state government in case of UT with Legislature.IGST is collected by the Central government.
Claim of ITCThe claim of CGST is available only against CGST and IGST in the same order.The claim of SGST credit is available only against SGST and IGST in the same order.The claim of SGST credit is available only against SGST and IGST in the same order.The claim of IGST is available against IGST, CGST and SGST in the same order.
Applicability of Composition SchemeA registered taxpayer can apply for the Composition Scheme if his aggregate annual turnover is upto Rs.1.5 croresA registered taxpayer can apply for the Composition Scheme if his aggregate annual turnover is upto Rs.1.5 croresA registered taxpayer can apply for the Composition Scheme if his aggregate annual turnover is upto Rs.1.5 crores.Composition scheme is not applicable in case of inter-state supplies
Registration LimitTaxpayer is not required to register under GST if his aggregate annual turnover is up to Rs. 40 lakhs in case of supply of goods, 20 lakhs in case of supply of services and 20 lakhs in case of supply of both goods and services in special category statesTaxpayer is not required to register under GST if his aggregate annual turnover is up to Rs. 40 lakhs in case of supply of goods, 20 lakhs in case of supply of services and 20 lakhs in case of supply of both goods and services in special category statesTaxpayer is not required to register under GST if his aggregate annual turnover is up to Rs. 40 lakhs in case of supply of goods, 20 lakhs in case of supply of services and 20 lakhs in case of supply of both goods and services in special category states.Registration under GST is mandatory in case on inter-state supplies
Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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