The Central Goods and Services Tax (CGST) is a concept governed by the Central Goods and Services Tax Act, 2017, which is a key component of India's unified indirect tax framework. The CGST is a tax levied by the Central Government on the supply of goods and services within a single state, known as an intra-state supply. The CGST Act, 2017, received the President's assent on April 12, 2017, and the entire Goods and Services Tax (GST) system was implemented on July 1, 2017.
The CGST was created to subsume and replace various central indirect taxes, such as Central Excise Duty and Service Tax, thereby solving the problem of a fragmented tax system and eliminating the cascading effect of taxes. The mechanism of CGST involves its simultaneous levy with the State Goods and Services Tax (SGST) on the same intra-state transaction, with both taxes being charged in equal amounts. For example, an 18% GST rate is split into 9% CGST and 9% SGST. A core provision is the Input Tax Credit (ITC), which allows businesses to offset the CGST paid on inputs against the CGST collected on sales, reducing the overall tax burden. The maximum CGST rate is capped at 20%.
The CGST Act is intrinsically connected to the Constitution (One Hundred and First Amendment) Act, 2016, which enabled the GST framework. It works in tandem with the SGST Act, 2017, and the Integrated Goods and Services Tax Act, 2017 (IGST), which governs inter-state supplies. Tax rates are recommended by the GST Council.
The CGST Act has seen recent amendments, such as the Central Goods and Services Tax (Amendment) Bill, 2023, which brought specified actionable claims under the purview of CGST. Furthermore, amendments to Section 38 of the CGST Act, 2017, have aligned ITC availability with the recipient's GSTR-2B statement. A statutory 3-year time-bar for GST return filing was also embedded in the CGST Act for 2026. The fundamental structure of CGST as a central levy on intra-state supply, however, has stayed the same.