UTGST - Salient Features

UTGST, the short form of Union Territory Goods and Services Tax, is
nothing but the GST applicable on the goods and services supply that
takes place in any of the union territories of India.
The Goods and Services Tax (GST) is applied to the sale of goods or
services within a State or a UT and outside.
However, when goods are moving intra-State, an SGST (State GST) is

applicable. When it comes to union territories, the SGST does not apply . If
the goods or services are supplied intra-UT, the UTGST is applied.
What is UTGST?
The reason behind UTGST applicability in GST is that the common State
GST (SGST) cannot be applied in a Union Territory without legislature.
To address this issue, GST Council has decided to have Union
Territory GST Law (UTGST) which would be on par with SGST.
However, SGST can be applied in Union Territories such as New Delhi
and Puducherry, since both have their individual legislatures, and can
be considered as “States” as per GST process.
In these cases, SGST cannot be applied in the case of UTs that do

not have a legislature.
Furthermore, besides the UTGST, the CGST (Central GST) is also

charged for such a supply of goods or services.
The President of India appoints an Administrator on his behalf who, in

turn, appoints commissioners and officers to administer UTGST rules.
UTGST State List Includes: UTGST applies to only those union
territories which do not have a separate legislature and that list
includes the following union territories :
 Chandigarh
 Lakshadweep
 Daman and Diu
 Dadra and Nagar Haveli
 Andaman and Nicobar islands
 Ladakh
The UTGST Act, 2017 encompasses guidelines related to the following:
 The levying and collection of GST in the intra-UT supply of goods

and services
 The power to allow exemption from the tax liability
 Transfer of the Input Tax Credit
 Recovery of pending tax
 Payment of tax
 Other transitional provisions, etc.
What are the 3 types of GST possible after UTGST’s inception in

GST:
There could be the following combination of taxes applicable for any
transaction:
 For Supply of goods and/or services within a state (Intra-State):
CGST + SGST
For Supply of goods and/or services within Union Territories (Intra
- UT): CGST + UTGST
For Supply of goods and/or services across States and/or Union
Features of UTGST: Here are some of the salient features of UTGST-
 When Ladakh separated from Jammu & Kashmir, it became a

union territory. However, Ladakh does not have its own legislature
and is, thus, eligible for the UTGST rules.
 However, in the case of Jammu & Kashmir, there is separate
legislation governing the UT. As such, UTGST is not applicable. A
new GST Act, the J&K GST Act, was passed , which lays down the
GST rules for Jammu & Kashmir.
 UTGST is similar to SGST. The only difference is that UTGST is
meant for territories without a legislature while SGST is meant for
States with their own legislature.
 The UTGST rate is not fixed and might vary depending on the
recommendations of the GST Council.
Order of utilization of credits taking into account of UTGST in GST:
In the case of utilization of Input Tax Credit of UTGST in an
orderly manner, the treatment to be followed is the same as
that of SGST. To sum this up, Input Tax Credit of SGST or
UTGST would first set off against SGST or UTGST respectively.
Output Tax liabilities and balance, if any, can be set off against
IGST Credits available.
With the new rule, the IGST credit needs to be completely

utilized before off-setting it with CGST or SGST. The order of
setting off ITC of IGST can be done in any proportion and any
order towards setting off the CGST or SGST output after
utilizing the same for IGST output.
UTGST Tax Rates:
The GST Council is empowered with authority to make changes to the
rates of GST, including UTGST rates. The UTGST rates are similar to the
SGST rates. Moreover, the Central Government has the power and
authority to recommend rate changes to the GST Council.
The UTGST tax rates differ across different types of goods and services.
There are five slabs of UTGST rates which are as follows:
0% (This slab includes goods and services that do not attract UTGST)
5%
12%
18%
28%
Tax exemption criteria for goods and services decided by the government
for SGST will be the same for UTGST.
How is UTGST Charged? There are three different instances of how UTGST
can be charged. These instances and their UTGST rules are as follows:
1. UTGST Charged on a Forward Charge Basis:

In the case of the intra-UT supply of goods, except the supply of alcohol
meant for human consumption, UTGST is charged. The UTGST is levied
under Section 15 of the CGST Act, 2017. The rate of UTGST would be
determined by the GST Council on the recommendation of the Central
Government. UTGST would be collected in a manner specified by the GST
Council and paid by taxpayers.
The business that supplies goods or services is responsible for collecting

UTGST from the recipients of such goods and services. The business then
deposits the collected UTGST to the Government. This process of charging
UTGST in the hands of the supplier of goods or services is called charging
tax on a forward charge basis.
2. UTGST Charged on a Reverse Charge Basis:
In some cases of supply, the Central Government specifies tax to be levied
on a reverse charge mechanism. Under the reverse charge mechanism,
the supplier is not liable to pay UTGST on the supplies. Instead, the
recipient of the goods or services is required to pay the applicable UTGST.
Moreover, if a supplier unregistered under GST supplies goods or services

to a registered individual or business, the liability of paying UTGST would
fall on the recipient and the reverse charge mechanism would become
applicable.
3. UTGST Charged for e-commerce Operators: In the case of e-commerce

operators, the UTGST rules might vary if the supply of the goods is intra-
UT and an e-commerce operator is making the supply. In such cases, the
e-commerce operator would be liable to pay UTGST.

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UTGST, the short form of Union Territory Goods and Services Tax, is

However, when goods are moving intra-State, an SGST (State GST) is

In these cases, SGST cannot be applied in the case of UTs that do

Furthermore, besides the UTGST, the CGST (Central GST) is also

The President of India appoints an Administrator on his behalf who, in

The UTGST Act, 2017 encompasses guidelines related to the following:

 The levying and collection of GST in the intra-UT supply of goods

What are the 3 types of GST possible after UTGST’s inception in

 When Ladakh separated from Jammu & Kashmir, it became a

With the new rule, the IGST credit needs to be completely

1. UTGST Charged on a Forward Charge Basis:

The business that supplies goods or services is responsible for collecting

Moreover, if a supplier unregistered under GST supplies goods or services

3. UTGST Charged for e-commerce Operators: In the case of e-commerce

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