What is Union Territory Goods and Service Tax (UTGST)

UTGST stands for Union Territory Goods and Services Tax. It is one of the components of the GST regime in India, along with the CGST, SGST, and IGST. UTGST is applicable on the supply of goods and services within the Union Territories of India, which are regions that are directly governed by the Central government.

List of Union Territories of India

• Ladakh
• Jammu and Kashmir
• Puducherry
• Lakshadweep
• Delhi
• Chandigarh
• Dadra and Nagar Haveli and Daman and Diu
• Andaman and Nicobar Islands

UTGST is levied and collected by the Central government, in addition to CGST, on the intra-UT supply of goods and services. The rate of UTGST is equal to the rate of SGST in the respective states. The revenue collected from UTGST is shared between the Central government and the Union Territory government, as per the recommendations of the GST Council.

Benefits of implementing UTGST

The main benefits of implementing UTGST are:

• It simplifies the tax structure and reduces the multiplicity of taxes in the Union Territories.
• It eliminates the cascading effect of taxes and lowers the tax burden on consumers and businesses.
• It enhances the tax compliance and administration in the Union Territories.
• It promotes a uniform and harmonised tax system across the country.
• It boosts the economic growth and development of the Union Territories.

List of UTGST states

The following table shows the list of UTGST states, along with their respective codes and abbreviations.

How is the UTGST levied and collected?

The UTGST is levied and collected by the Central government on every intra-UT supply of goods and services. The UGST rate does not exceed 20%, as notified by the Central government on the recommendations of the GST Council. The UTGST is charged along with the CGST on every taxable supply.

The following example illustrates how UTGST is levied and collected:

Suppose that a dealer in Chandigarh sells goods worth Rs. 10,000 to a customer in Chandigarh. The GST rate applicable on these goods is 18%, comprising 9% CGST and 9% UTGST. The dealer will charge Rs. 1,800 as GST on this transaction, out of which Rs. 900 will be CGST, and Rs. 900 will be UTGST. The dealer will collect this amount from the customer and deposit it with the Central government.

Exemption from UTGST

The central government has the power to grant exemption from UTGST to any goods or services or any person or class of persons, as per section 8 of the UTGST Act. The exemption can be granted either absolutely or subject to such conditions as may be specified in the notification. The exemption can be granted either prospectively or retrospectively, as deemed fit by the central government.

UT GST applicability

Output liabilities of the taxable person as per the UTGST Act can are often explained as follows:

UTGST rates

The rates of UTGST are determined by the Central government on the recommendations of the GST Council. The rates are notified through notifications issued under section 7 of the UTGST Act. Union Territory goods and services, which are the full form of UTGST tax has the same rates as State Goods and Services Tax. So, the UTGST rates are 0%, 5%, 12%, 18%, and 28% respectively. Further, the exemption rules for goods and services are also similar to SGST. The rates are aligned with the rates of SGST in the respective states.

The current rates of UTGST (as on January, 2025) are as follows:

How to Calculate UTGST?

Calculating UTGST is simple and easy to understand.

Here is a step-by-step guide:

Step 1: Determine the taxable value, which is the price of the goods or services being sold

Step 2: Identify the UTGST rate, which is set by the central government and is usually the same as the SGST rate for the state

Step 3: Calculate the UTGST amount by multiplying the taxable value by the UTGST rate

Formula for calculating UTGST

The formula to calculate UTGST is:

UTGST = (Value of goods) × (UTGST rate/100)

Examples of UTGST

Consider a business in Karnataka selling goods worth Rs. 10,000. Under GST, two types of taxes are applied: Central GST (CGST) and State GST (SGST). If the GST rate is 18%, it is divided equally, with 9% CGST and 9% SGST.

So, the business would charge:

• CGST: Rs. 10,000 x 9% = Rs. 900
• SGST: Rs. 10,000 x 9% = Rs. 900
• Total GST: Rs. 900 (CGST) + Rs. 900 (SGST) = Rs. 1800

Now, let us consider a similar business in the Union Territory of Lakshadweep. Since Lakshadweep does not have its own state legislature, instead of SGST, the tax applied is UTGST. For the same goods worth Rs. 10,000 with an 18% GST rate, the calculation would be:

• CGST: Rs. 10,000 x 9% = Rs. 900
• UTGST: Rs. 10,000 x 9% = Rs. 900
• Total GST: Rs. 900 (CGST) + Rs. 900 (UTGST) = Rs. 1800

In both cases, the total GST is Rs. 1800, but the state-level tax differs. In Karnataka, it is SGST, whereas in Lakshadweep, it is UTGST.

Documents required for UTGST registration

The documents required for UTGST registration are the same as the ones required for GST registration. The following is a list of the common documents required for UTGST registration:

• PAN card of the applicant
• Aadhaar card of the applicant
• Proof of business address such as rent agreement, electricity bill, etc.
• Proof of business identity such as partnership deed, certificate of incorporation, etc.
• Bank account details such as cancelled cheque, bank statement, etc.
• Photograph and digital signature of the applicant
• Authorisation letter or board resolution for authorised signatory

The applicant can apply for UTGST registration online through the GST portal by filling the relevant forms and uploading the required documents. The registration process is completed within 3 working days after verification by the GST officer. The applicant will receive a GSTIN (GST identification number) which is a 15-digit alphanumeric code that serves as a unique identity for the taxpayer under GST.

Additional Read: GST Calculator