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The UTGST Act expands to Union Territory Goods and Service Tax.
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 five territories of India, including Andaman and Nicobar Islands, Dadra and Nagar Haveli, Chandigarh, Lakshadweep and Daman and Diu called as Union territories of India.
Union Territory GST will be charged in addition to the Central GST (CGST)
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.
UTGST applies to only those union territories where we do not have a separate legislature and that list includes the following union territories :
There could be the following combination of taxes applicable for any transaction:
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 utilised 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 utilising the same for IGST output.
Union Territory GST contains same tax rates of 0%, 5%, 12%, 18% and 28%. Tax exemption criteria for goods and services decided by the government for SGST will be same for UTGST.