UTGST: Which Union Territories, and When It Applies

UTGST explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.

A short Act that mostly borrows from the CGST Act — and one question that decides whether a supply carries UTGST or SGST.

The Union Territory Goods and Services Tax Act, 2017 (No. 14 of 2017) was enacted to levy and collect tax on intra-State supply of goods or services or both by the Union territories. Section 7(1): there shall be levied a tax called the Union territory tax on all intra-State supplies, except on alcoholic liquor for human consumption and un-denatured extra neutral alcohol or rectified spirit used for the manufacture of alcoholic liquor for human consumption, on the value determined under s.15 of the CGST Act, at rates not exceeding twenty per cent as notified on the Council's recommendations. Section 7(2): tax on petroleum crude, high speed diesel, motor spirit, natural gas and aviation turbine fuel applies from a date to be notified. Sections 7(3) and 7(4) carry the reverse charge provisions, mirroring the CGST Act.

The distinction that decides the head

A Union territory with its own legislature levies SGST; a Union territory without one levies UTGST.

Why. SGST is levied under a State GST Act passed by a State or Union territory legislature. Where a Union territory has no legislature, there is no such Act — so Parliament enacted the UTGST Act to supply the second component of the domestic levy.

The practical consequence for a supplier: an intra-State supply always carries CGST plus a second component, and the second component is SGST or UTGST depending on the territory. The rate is the same; only the head differs.

And it matters for the ledgers. The electronic credit ledger and the electronic liability register hold CGST, SGST/UTGST, IGST and cess as separate heads. A supply in a UTGST territory posts to the UTGST head, and the order of utilisation under ss.49, 49A and 49B of the CGST Act with Rule 88A treats UTGST as it treats SGST — it cannot be cross-utilised against CGST. Order of utilisation →

Section 7: the levy, and what mirrors the CGST Act

The structure of s.7 of the UTGST Act follows s.9 of the CGST Act clause for clause:

The exclusion in s.7(1) also mirrors the CGST position: alcoholic liquor for human consumption, and — following the amendment — un-denatured extra neutral alcohol or rectified spirit used for the manufacture of alcoholic liquor for human consumption.

And the value is determined under s.15 of the CGST Act, not under a separate UTGST valuation provision. The UTGST Act borrows the valuation machinery entirely. Transaction value →

Section 21: everything else is borrowed

Section 21 of the UTGST Act applies the provisions of the CGST Act to Union territory tax mutatis mutandis, across the range of matters it lists — including scope of supply, composite and mixed supplies, time and value of supply, input tax credit, registration, returns, payment, refunds, audit, inspection, search, seizure and arrest, demands and recovery, liability to pay in certain cases, advance ruling, appeals and revision, offences and penalties, transitional provisions and miscellaneous provisions.

Which is why this cluster's analysis applies unchanged. Everything written about s.16 credit conditions, s.17(5) blocked credit, s.54 refunds, s.74A demands, s.107 appeals and s.122 penalties applies to Union territory tax through s.21.

The same architecture appears three times:

• Section 20 of the IGST Act applies the CGST provisions to integrated tax;
• Section 21 of the UTGST Act applies them to Union territory tax;
• Section 11(4) of each SGST Act achieves the equivalent for State tax.

So the CGST Act is the machinery Act for the whole system, and the other three levy Acts are short because they borrow it.

Section 8: exemption, and section 9: payment of tax

Section 8 of the UTGST Act mirrors s.11 of the CGST Act — the power to exempt goods or services from Union territory tax, generally or subject to conditions, on the Council's recommendations.

Section 9 deals with the payment of tax, and the order of utilisation for UTGST credit follows the same architecture as SGST: UTGST credit is used against UTGST and then IGST, and cannot be cross-utilised against CGST.

Which produces the same practical outcome as for SGST — a business with an accumulating UTGST balance and no UTGST output liability has the same limited exit routes: the two cases in s.54(3), or nothing. Refund of excess cash ledger balance →

What a supplier actually has to do

Little that is specific, and that is the point.

1. Determine the place of supply in the ordinary way under s.10 to s.13 of the IGST Act. The decision tree →
2. Apply the s.7 / s.8 IGST test — supplier's location against place of supply — to decide inter-State or intra-State. Sections 7 and 8 →
3. Where intra-State, identify whether the territory levies SGST or UTGST, and charge CGST plus that head.
4. Use the correct State or UT code on the invoice, as Rule 46(n) requires for the place of supply.
5. Report it correctly, since GSTR-1 and GSTR-3B hold the heads separately.

And where a supplier operates in a Union territory, registration, returns, credit, refunds and every other obligation run under the CGST machinery applied by s.21 — so no separate compliance regime arises.

Key takeaways

• UTGST applies in Union territories without a legislature; those with one levy SGST.
• Section 7 mirrors s.9 of the CGST Act — levy, petroleum deferral, and both reverse charge limbs.
• The rate ceiling is twenty per cent, and the value is determined under s.15 of the CGST Act.
• The exclusion covers alcoholic liquor and ENA or rectified spirit used to manufacture it.
• Section 21 applies the entire CGST machinery to Union territory tax mutatis mutandis.
• UTGST credit behaves like SGST credit — no cross-utilisation with CGST.

Read next

• Sections 7 and 8: The Two-Step Inter-State Test
• The Place of Supply Decision Tree
• Order of Utilisation: Sections 49A, 49B and Rule 88A
• Sections 17, 18 and 19: Apportionment, Credit Transfer and the Wrong Head

Disclaimer: Positions stated as on 5 September 2026, based on the UTGST Act, the CGST Act and the IGST Act as amended to 31 March 2026 (ICAI Bare Law, 12th edition). Which Union territories levy Union territory tax depends on their legislative status, which should be checked against the current position.