CGST vs SGST vs IGST: When Does Each Apply?

India's Goods and Services Tax (GST) is a destination-based tax. This means the tax revenue goes to the state where the goods or services are consumed, not where they are produced. To manage this between the Central Government and the 28+ States, the system is divided into three primary components: CGST, SGST (or UTGST), and IGST.

The Core Difference: At a Glance

Tax Type	Full Form	Authority	Supply Type
CGST	Central GST	Centre	Intrastate (Within same state)
SGST	State GST	State	Intrastate (Within same state)
UTGST	Union Territory GST	UT	Intrastate (Within Union Territory)
IGST	Integrated GST	Centre	Interstate (Between different states)

1. Intrastate Supply: CGST + SGST

When the location of the supplier and the Place of Supply (location of the buyer) are in the same state, it is an intrastate supply.

In this case, the total GST rate is split equally (50-50) between CGST and SGST. For example, if the GST rate is 18%, you charge 9% CGST and 9% SGST.

Example: A web designer in Pune (Maharashtra) builds a website for a client in Mumbai (Maharashtra). The invoice will show CGST 9% and SGST 9%.

2. Interstate Supply: IGST

When the supplier and the buyer are in different states, it is an interstate supply. Here, only one tax is charged: Integrated GST (IGST). The Central Government collects the entire IGST and then distributes a portion to the state where the consumption occurred.

Example: The same Pune designer bills a client in Bangalore (Karnataka). The invoice will show a single line for IGST at 18%.

3. The UTGST Exception

For Union Territories that do not have their own legislature (like Andaman & Nicobar, Lakshadweep, Ladakh, Daman & Diu, Dadra & Nagar Haveli, and Chandigarh), UTGST replaces SGST.

Note: Delhi, Puducherry, and Jammu & Kashmir have their own legislatures and are treated as "States" for GST purposes—they use SGST.

How GST is Split Across Rates

Regardless of the type, the total tax remains the same for the customer. Here is how common rates are split on your invoice:

Total GST Rate	CGST Portion	SGST Portion	IGST Portion
5%	2.5%	2.5%	5.0%
12%	6.0%	6.0%	12.0%
18%	9.0%	9.0%	18.0%
28%	14.0%	14.0%	28.0%

Why "Place of Supply" Matters

The entire logic of which tax to charge depends on the Place of Supply.

• For Goods: Usually where the goods are delivered.
• For Services: Usually the location of the recipient. If the recipient is unregistered, it's the location of the supplier (with specific exceptions for hotels, events, and transport).

Charging CGST+SGST when the place of supply is in another state is a legal error. Your client will not be able to claim Input Tax Credit (ITC), and you might face penalties during a GST audit.

Export of Services and SEZ

Supplies to foreign clients (Exports) or to units in a Special Economic Zone (SEZ) are treated as Interstate Supplies. However, they are "Zero-Rated."

• You bill with IGST 0% (if you have an LUT).
• Even though you don't charge tax, you can still claim a refund for the GST you paid on your business expenses (laptops, internet, office rent).

Common Mistakes and How to Fix Them

1. Wrong Head of Tax: If you paid CGST+SGST instead of IGST, you cannot adjust it. You must pay the correct tax (IGST) and then claim a refund for the wrongly paid CGST+SGST.
2. Unregistered Buyers: Just because a buyer doesn't have a GSTIN doesn't mean you don't charge tax. You still charge tax based on their state address.
3. GSTIN Validation: Always check the first two digits of your client's GSTIN. They represent the state code (e.g., 27 for Maharashtra, 29 for Karnataka). If it doesn't match your state code, it's an IGST invoice.

FAQ: Frequently Asked Questions