The GST council has included the UTGST in order to complete the constitutional obligation which it says The Constitution (One Hundred and First Amendment) Act, 2016, has added a new clause, namely Clause 26B on “State” in Article 366. As per this clause, “State” with reference to Articles 246A, 268, 269, 269A, and 279A includes a Union territory with Legislature yet even ‘State’ for the purposes of GST, added a Union territory with Legislature.
The purpose of UTGST bill is to apply a collection of tax on every Intra UT supply of goods and service in the union territories in absence of legislature and has similar properties as that of SGST. So all in all, the SGST cannot fulfill the needed provision here and for the same UTGST has taken its place. The Union Territory GST is applied to union territories of India namely Chandigarh, Lakshadweep, Daman and Diu, Dadra and Nagar Haveli, Andaman and Nicobar Islands.
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Why Union Territory GST Is Implemented?
The main agenda has been taken up by the GST council for which the apex body has introduced the UTGST which will continue to provide benefits as same as SGST. Apart from that, New Delhi and Puducherry will still enjoy the SGST provisions as both states have their separate legislatures and can operate freely on the terms of SGST and has also been considered as the states by the GST Council.
For more understanding on the topic of the Union Territory GST, one can see the legislature rules and regulations written in the constitution, which says, As per Article 246(4) of Constitution, the Parliament has rights to form laws with respect to any matter for any part of the territory of India, which is not included in the State, including the matters enumerated in State List. By the verification of the aforementioned rules and laws of the constitution, the central government can forward the UTGST in the parliament for further approval.
Various combination of taxes can be as seen after the implementation GST like:
- 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 Territories (Inter-State/ Inter-UT): IGST
Read Also: Meaning of SGST, IGST, CGST with Input Tax Credit Adjustment
In the case of Input tax credit, Computation of utilization of Input Tax Credit of UTGST would be the equivalent like SGST. Here suggests, Input Tax Credit of SGST or UTGST would first set-off opposite SGST or UTGST individually. Output Tax liabilities and balance, if any, can be set-off against IGST Output Tax liabilities.
