The Union Territory Goods and Services Tax (UTGST) is part of India’s GST system. It is a special tax that applies only in Union Territories that do not have their own legislative assemblies. It ensures that people in Union Territories follow the same tax structure as states.
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What is UTGST?

The UTGST stands for Union Territory Goods and Services Tax. It works just like State GST but applies only within Union Territories without a legislature. The Central Government levies UTGST along with Central GST on supplies made within these regions. The tax rate under UTGST is equal to the rate of SGST in states. The revenue collected is shared between the Centre and the respective Union Territory based on recommendations of the GST Council.

Where Does UTGST Apply?

The UTGST applies in Union Territories such as Andaman and Nicobar Islands, Lakshadweep, Chandigarh, Dadra and Nagar Haveli and Daman & Diu, and Ladakh. In contrast, Union Territories like Delhi, Jammu and Kashmir, and Puducherry have their own legislatures. They follow the State GST system instead of UTGST.

When Does UTGST Apply?

The tax applies only to supplies of goods or services made within a Union Territory that does not have its own legislature. This is called an intra-UT supply. In such cases, the GST is divided equally between CGST and UTGST. For example, if the GST rate is 18 percent, then CGST is nine percent and UTGST is nine percent. For supplies between a Union Territory and a State, or between two Union Territories, Integrated GST applies instead of UTGST.

Example of UTGST

Consider an example. A seller supplies goods worth ₹10,000 within Lakshadweep at an 18 percent GST rate. The Central Government collects ₹900 as CGST and another ₹900 as UTGST. The total GST paid is ₹1,800. This system is the same as the division of CGST and SGST in states.

What Are The Benefits of UTGST

The UTGST Act simplifies tax compliance in Union Territories. It removes the problem of double taxation and reduces the overall burden on businesses and consumers. It also ensures tax parity with the states and helps create a uniform system across the country.

Conclusion

In conclusion, UTGST plays a vital role in maintaining consistency in the GST regime. It ensures that Union Territories without legislatures follow the same rules as states. By applying UTGST, the government creates a simple, uniform, and fair tax structure across India.