It is a destination based tax on consumption of goods and services. It is proposed to be levied at all stages right from manufacture up to final consumption with credit of taxes paid at previous stages available as setoff. In a nutshell, only value addition will be taxed and burden of tax is to be borne by the final consumer. The tax would accrue to the taxing authority which has jurisdiction over the place of consumption which is also termed as place of supply.

SGST means State Goods and Services Tax, one of the three categories under Goods and Services Tax (CGST, IGST and SGST) with a concept of one tax one nation. SGST falls under State Goods and Services Tax Act 2016. For easy understanding, when SGST is being introduced, the present state taxes of State Sales Tax, VAT, Luxury Tax, Entertainment tax (unless it is levied by the local bodies), Taxes on lottery, betting and gambling, Entry tax not in lieu of Octroi, State Cesses and Surcharges in so far as they relate to supply of goods and services etc. are subsumed. The revenue collected under SGST is for State Government.

IGST is a part of Goods and Services Tax (GST). IGST means Integrated Goods and Services Tax, one of the three categories under Goods and Services Tax (CGST, IGST and SGST) with a concept of one tax one nation. IGST falls under Integrated Goods and Services Tax Act 2016. IGST is charged when movement of goods and services from one state to another. For example, if goods are moved from Tamil Nadu to Kerala, IGST is levied on such goods. The revenue out of IGST is shared by state government and central government as per the rates fixed by the authorities.

As per GST Law:
Under the GST regime, an Integrated GST (IGST) would be levied and collected by the Centre on inter-State supply of goods and services. Under Article 269A of the Constitution, the GST on supplies in the course of interState trade or commerce shall be levied and collected by the Government of India and such tax shall be apportioned between the Union and the States in the manner as may be provided by Parliament by law on the recommendations of the Goods and Services Tax Council.

Introduction of GST would be a very significant step in the field of indirect tax reforms in India. By amalgamating a large number of Central and State taxes into a single tax and allowing set-off of prior-stage taxes, it would mitigate the ill effects of cascading and pave the way for a common national market. For the consumers, the biggest gain would be in terms of a reduction in the overall tax burden on goods, which is currently estimated at 25%-30%. Introduction of GST would also make our products competitive in the domestic and international markets. Studies show that this would instantly spur economic growth. There may also be revenue gain for the Centre and the States due to widening of the tax base, increase in trade volumes and improved tax compliance. Last but not the least, this tax, because of its transparent character, would be easier to administer.

The GST would replace the following taxes:

1. (i). taxes currently levied and collected by the Centre:
   1. Central Excise duty
   2. Duties of Excise (Medicinal and Toilet Preparations)
   3. Additional Duties of Excise (Goods of Special Importance)
   4. Additional Duties of Excise (Textiles and Textile Products)
   5. Additional Duties of Customs (commonly known as CVD)
   6. Special Additional Duty of Customs (SAD)
   7. Service Tax
2. (ii). State taxes that would be subsumed under the GST are:
   1. State VAT
   2. Central Sales Tax
   3. Luxury Tax
   4. Entry Tax (all forms)
   5. Entertainment and Amusement Tax (except when levied by the local bodies)
   6. Taxes on advertisements
   7. Purchase Tax
   8. Taxes on lotteries, betting and gambling
   9. State Surcharges and Cesses so far as they relate to supply of goods and services

The GST Council shall make recommendations to the Union and States on the taxes, cesses and surcharges levied by the Centre, the States and the local bodies which may be subsumed in the GST.

Centre will levy and administer CGST & IGST while respective states will levy and administer SGST.

The CGST and SGST would be levied at rates to be jointly decided by the Centre and States. The rates would be notified on the recommendations of the GST Council.