CGST Act 2017- Central Goods and Services Tax Act, 2017
29 Jan, 2026
By Online Legal India
Published On 29 Jan 2026
Category GST
The CGST Act 2017 is considered as the primary legislation of the Indian Law. It regulates the levy and collection of Central Goods and Services Tax. It applies to intra-state supplies within India. So, it is important to understand the indirect tax under GST. This has led to the mission of “One Nation, One Tax”. It helps to simplify the business operations. It combined complicated taxes into one system. The complicated tax can include excise duty and service tax. In this blog, you will get guidance on the CGST Act, 2017.
The CGST Act 2017 is a law made by the Indian Parliament. It controls how businesses charge CGST on goods and services sold within one state. This also controls the collection of the CGST on these transactions. The full name of CGST is the Central Goods and Services Tax. The revenue from this law goes to the central government. CGST Act received Presidential assent on 12 April 2017 and came into force on 1 July 2017. Thus, experts consider it as the cornerstone of the unified "One Nation, One Tax" system
Listed below are some key features of the CGST Act, 2017:
CGST is imposed by the Central Government. This applies to all transactions of goods and services within a state. Authorities usually assess it together with the State GST.
The Input Tax Credit (ITC) mechanism enables businesses to claim credit for CGST paid on inputs. They can do it from their inputs while calculating their output CGST obligations. This leads to a reduction in tax costs.
A registered taxpayer has the authority to determine their tax obligations. They can also make corresponding payments.
Small taxpayers can choose a simplified tax option. It gives lower rates and no ITC advantages. This applies when their turnover remains below the prescribed limit and ITC is not available.
The GST portal handles the complete process of registration. It also handles return filing and refunds.
This measure mandates that businesses pass on the benefits of tax rate reductions or input tax credit to consumers.
The E-way Bill System requires all goods shipments of more than Rs. 50,000 to use an electronic way bill. This electronic bill serves as compulsory documentation.
The law allows tax authorities with auditing rights and inspection powers. These powers include conducting searches and making arrests when they suspect fraud.
The law requires e-commerce operators to collect TCS (Tax Collected at Source). The rate will be 1%, total = 0.5% CGST + 0.5% SGST.
The Single tax regime collects all central taxes into one system. It mainly simplifies the compliance procedures. This prevents cascading of taxes.
The indirect tax system can be considered as complex before GST was introduced in India. The Central Government has specified various taxes. The taxes can include:
a) Central Excise Duty
b) Service Tax
c) Central Sales Tax
In contrast, states wanted to collect their own taxes. It includes:
a) Value Added Tax (VAT)
b) Entry Tax
c) Other Taxes
Thus, this can be a harder to maintain taxes and hamper trade between states. In such a case, a clear and consistent tax system was needed. The Constitution (101st Amendment) Act, 2016 was passed to create GST. It was passed after many discussions. The CGST Act was set up to manage taxes for sales within a state. The SGST Act was created to handle taxes at the state level.
The CGST Act extends to the entire territory of India, including Jammu & Kashmir and Ladakh. These regions were brought under the law through subsequent amendments. This law establishes the procedures for levy and collection of Central GST on intra-state supplies of goods and services.
The Act is divided into chapters and sections. It helps businesses to handle their operations. These operations can include:
a) Registration
b) Input tax Credit (ITC) claims
c) Return Submission
d) Supply classification
e) Penalty Payments
Here are some important terms in the CGST Act:
a) Supply
This term covers any goods and services are provided in business. This may also apply even where no consideration is involved in some cases.
b) Taxable Person
Taxable person means someone who is registered or needs to be registered under the ACT.
c) Input Tax Credit (ITC)
This allows companies to get back the tax they paid on their inputs from the tax they owe on their sales.
Here are the key provisions in Central Goods and Services Tax Act, 2017:
The tax applies to all intra-state goods and service deliveries. Alcoholic liquor intended for human consumption is not subject to GST. Section 9 authorizes CGST up to 20%, but effective GST slabs are 0%, 5%, 12%, 18%, and 28% (combined CGST + SGST). CGST component generally maxes at 14% in practice.
The registration requirement applies to all businesses. Businesses with turnover exceeding the prescribed threshold. The threshold is Rs- 40 lakh for goods, Rs- 20 lakh for services, and Rs- 10 lakh for special category states. Certain businesses must register even if their revenue falls below the required threshold. This requirement applies to e-commerce operators who need to register their businesses.
Registered taxpayers have the benefit to claim ITC to get credit for taxes they paid on their input goods and services. They used these goods and services for business operations.
As per the section 17(5) of the ITC Blocked credit specifies items that cannot be used for claiming ITC credits. These items can include:
a) Motor Vehicles
b) Food
c) Personal Consumption
d) Other related items
The Composition Levy described in Section 10. It established an simple tax system for small taxpayers to meet their basic tax compliance needs.
This section highlights the rules for determining tax assessment values. It focuses on price and related party transactions.
It allows officers to check each and take items if they think someone is avoiding paying taxes.
The Offences and Penalties section 122 establishes punishment measures for 21 different types of violations. These violations include failure to pay taxes and issuance of fake invoices and failure to register.
It gives taxpayers with a method to contest unfavorable decisions. Tax authorities have made these decisions.
Section 171 establishes an Anti-profiteering Measure. This requires businesses to pass their tax savings to customers.
As per the CGST Act, Businesses must do GST registration. This applies if the aggregate turnover of a company is more than the stipulated limit.
Here are the various types of registration:
It suits businesses that are engaged with the supply of goods or services which is more than the threshold.
Small businesses can pay lower taxes with less paperwork. This happens if they stay under a certain turnover limit.
These registrations are applicable for:
a) Non-resident taxable persons
b) E-commerce operators
c) Persons who deals with deduct or collect the tax at the source.
In the case of invoices under CGST, registered taxpayers must issue tax invoices for every taxable supply. It can include all the important details. In contrast, you must file multiple returns. The return can include monthly, quarterly, and annual return. This mainly suits to returns that is based on taxpayer category.
In the purpose of paying taxes, all registered taxpayers must use the specified online methods. They also need to keep all the necessary documents. The law allows tax officials to do regular checks. It also allows for special checks if they suspect any problems.
The ITC mechanism is a key part of the CGST system. It allows businesses to get back the tax they paid on inputs, input services and capital goods. They use it to run their business. This includes items like supplies and equipment. This credit can then be used to pay the tax they owe, which helps reduce extra taxes.
Only registered businesses can claim ITC if they meet certain conditions. These conditions include having a valid tax invoice and paying the tax to the government.
If a business does not pay its supplier within 180 days, it must reverse the ITC. If the items are used for non-business activities, it must reverse the ITC.
There are also some rules and restrictions on using ITC. These include not being able to claim credits on certain goods and services.
Conclusion
The CGST Act 2017 has redefined the economic landscape in India. It has implemented a unified tax system. This system reduces all existing separate taxes. The elimination of the cascading effect together with the simplified Input Tax Credit process has resulted in lower business expenses. This has benefited businesses significantly. It has increased international competitiveness for businesses. The Act functions as a fundamental element of "One Nation, One Tax." It establishes digital compliance requirements and economic formalization processes. This supports businesses in achieving sustainable development. If you need any help about GST registration, contact Online Legal India.
FAQ
Q1. What is the CGST Act 2017?
The CGST Act 2017 is a law in India. It allows the Central Government charge and collect tax on goods or services sold within the same state. This was made to replace several central taxes. It includes Excise Duty and Service Tax with a single system.
Q2. Is registration mandatory under the CGST Act, 2017?
Yes, registration is mandatory under the CGST Act 2017. This applies to businesses with an aggregate turnover is more than Rs. 20 lakh. Rs. 10 lakh is for certain special category states.
Q3. What is Input Tax Credit (ITC) under the CGST Act, 2017?
Input Tax Credit is an important part of the CGST Act 2017. It allows businesses lower the tax they need to pay on sales. They can reduce it by the amount of tax they already paid on their purchases. This system helps avoid paying tax on tax. It also reduces the total cost of goods and services.
Disclaimer
This article is for informational purposes only and does not constitute legal advice. Online Legal India is a digital platform. If you require legal assistance, we strongly recommend consulting a qualified lawyer or law firm.
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