Union Territory GST (UTGST): Registration, Rates and Compliance for UTs

The Union Territory Goods and Services Tax (UTGST) is a component of India’s GST framework that applies to intra-UT supplies in Union Territories without their own legislature. It mirrors SGST (State GST) in design but is administered by the Central Government on behalf of the UT. Businesses operating in Andaman & Nicobar Islands, Chandigarh, Dadra & Nagar Haveli and Daman & Diu, Lakshadweep, and Ladakh must understand UTGST to correctly charge tax, file returns, and claim ITC.

Which Union Territories Levy UTGST and Which Levy SGST?

How Does UTGST Work and What Are the Applicable Rates?

UTGST operates exactly like SGST. For intra-UT supplies (supplier and buyer both in the same UT), the tax is split equally between CGST and UTGST. For inter-state or inter-UT supplies, IGST applies instead.

How Do You Register for GST in a Union Territory?

GST registration in a UTGST-covered territory follows the same process as registration in any state — through the GST portal at gst.gov.in. The key difference is that the GSTIN will reflect the UT code (for example, A&N Islands is code 35, Chandigarh is 04, DNHDD is 26, Lakshadweep is 31, Ladakh is 02).

The threshold for compulsory registration in the 5 UTGST territories is Rs 10 lakh for services and Rs 20 lakh for goods — these are the special category territory limits, not the standard Rs 20 lakh / Rs 40 lakh limits that apply to larger states. This lower threshold means more small businesses in UTs require GST registration.

What Are the ITC Rules for UTGST?

Input Tax Credit (ITC) of UTGST can be used in a specific order of set-off:

• UTGST ITC first against UTGST liability (intra-UT output tax)
• Remaining UTGST ITC against IGST liability (inter-state output tax)
• UTGST ITC cannot be used to pay CGST liability (and vice versa)

What Returns Must Businesses in Union Territories File?

UTGST filing obligations follow the same CGST return schedule. All returns are filed on gst.gov.in:

• GSTR-1: Monthly (11th) or quarterly (31st) — outward supplies
• GSTR-3B: Monthly (20th) or quarterly (22nd/24th QRMP) — summary return and tax payment
• GSTR-9: Annual return by 31 December of the following year
• GSTR-9C: Annual reconciliation statement (if turnover exceeds Rs 5 crore)

Are There Any Special Benefits or Exemptions for Union Territory Businesses?

Businesses in certain UTs may benefit from area-based exemptions and incentive schemes announced by the Ministry of Commerce or Development Commissioners. Lakshadweep and A&N Islands, being remote territories, historically had area-based incentives for manufacturing. Additionally, the Composition Scheme is available for eligible UT-based businesses at the same turnover limit (Rs 1.5 crore for traders; Rs 50 lakh for services) as other states.