What is UTGST? Learn Its Applicability Through a Clear Example

The indirect tax collected on Goods and Services from GST is divided into two parts; one part goes to the central government, and the other part goes to the state. On an invoice, you must have seen the breakdown of the total GST into two parts, namely, CGST and SGST. Here, SGST is for the State Government, while CGST is for the Central Government. But what about Union Territories? What is the source of their revenue? That’s where UTGST comes into play. At its core, UTGST is equivalent to SGST, but it is introduced for Union Territories, ensuring transparency and seamless compliance. 

If you are a business owner located in UT, then you must know what UTGST is, its applicability and a UTGST example for a clear understanding. Read this blog further to know everything about UTGST in detail. 

What is UTGST?

UTGST is the abbreviation of Union Territory Goods and Services Tax. In case you are familiar with GST (Goods and Services Tax), UTGST is equivalent to State GST (SGST), applicable in India’s Union Territories. 

In India, it is a dual model of indirect taxation, where both the central and state governments collect tax. But what about Union Territories like Chandigarh, Delhi, and Ladakh, where there is no state legislature? In such regions, it is the responsibility of the central government to impose a mechanism to collect indirect tax. 

That’s where UTGST comes in. It complements CGST in the same way as SGST complements CGST in other states.

When is UTGST Applicable?

There are some conditions under which UTGST is applicable, which are as follows: 

You buy goods or services within a Union Territory, and that territory does not have its own legislature. 

Note, UTGST won’t be applicable in Union Territories with their own legislature, for example, Delhi and Puducherry. 

Place	Legislature?	Applicable Tax
Chandigarh	No	CGST + UTGST
Delhi	Yes	CGST + SGST
Lakshadweep	No	CGST + UTGST
Puducherry	Yes	CGST + SGST

Union Territories Under UTGST

UTGST applies to these Union Territories:

• Chandigarh

• Lakshadweep

• Andaman & Nicobar Islands

• Dadra and Nagar Haveli

• Daman & Diu

• Ladakh 

Whereas Delhi, Puducherry, and Jammu & Kashmir run on SGST, because they have their own legislatures.

UTGST Example

Here is a real-life example of how UTGST is in action: 

Suppose you spend ₹10,000 at a clothing store in Chandigarh. GST rate is 18%. How’s the split?

CGST (Central GST): 9% of ₹10,000 = ₹900

UTGST: 9% of ₹10,000 = ₹900

Total GST = ₹1,800

You pay ₹1,800 in GST, divided evenly between CGST and UTGST.

Imagine doing the same transaction in Karnataka. The shop would charge you SGST instead of UTGST, but the percentage and the amount would remain the same. 

In short, UTGST comes into the picture where a region does not have its own state government. 

UTGST Rates in 2025

In September 2025, the GST Council made significant changes in the GST structure, which came into effect from September 22, 2025. There’s a new two-slab structure for GST in India:

Type of Goods	UTGST Rate (from Sep 2025)	CGST Rate	Example
Essentials	2.5%	2.5%	Basic groceries
Standard consumer goods	9%	9%	Electronics
Luxury items	20%	20%	Pan masala

How UTGST Affects GST Filing

Have you ever been confused about the various GST forms that must be filled out when filing GST? You’re not alone. However, the process can be made less complicated by businesses located in Union Territories, by understanding the in and out of UTGST: 

Here’s how UTGST will affect your filing:

• Returns Filing: Businesses in Union Territories are required to file GST returns in the same form as that of other businesses under CGST/SGST. But instead of mentioning SGST, they have to mention UTGST. 

• Tax Payment: The businesses in Union Territories should remember to make sure that they are paying UTGST and CGST when they make transactions within the same UT, and IGST when they are making transactions across UT. 

How to Claim ITC on UTGST

ITC under UTGST functions similarly to Input Tax Credit (ITC) under SGST, except that there are certain differences that businesses in a Union Territory need to be aware of.

When you pay UTGST against your purchases, be it goods or services, you are allowed to claim that sum as a credit as long as you use it for business purposes. This credit would then be offset against your UTGST liability in your filing of your GST returns.

Here are a few important points to keep in mind:

• With UTGST credits, you are allowed to pay UTGST liability only.  You cannot use it for SGST. 

• UTGST credit cannot be offset with CGST or IGST

Closing Notes 

We hope that after reading this blog, you will be able to navigate through the nuances of UTGST very easily. If you are a business owner in the Union Territory and are finding it difficult to file your GST returns, we recommend that you sign up with Munim GST Return Filing software now and make your GST compliance smoother than ever. 

Frequently Asked Questions 

Can both SGST and UTGST be levied​?

No. Both cannot be levied together because UTGST applies only in Union Territories without legislatures, while SGST is levied in states. 

Can ITC be set off against UTGST liability?​

No. Input Tax Credit (ITC) of SGST from a state cannot be used to offset UTGST liability.

Are UTGST and CGST equal​?

Yes. UTGST and CGST are levied at equal rates on intra-Union Territory supplies.

Is UTGST applicable in Haryana​?

No. Haryana is a state, so SGST applies there, not UTGST.

Is UTSGT charged by the central government​?

Yes. UTGST is imposed and collected by the central government because Union Territories don’t have their own legislatures. But the collected revenue is transferred to the UTs.

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