One of the most confusing aspects of GST for Indian business owners is understanding when to charge CGST, SGST, or IGST. This guide breaks it down with simple language and real-world examples.
What Do These Terms Mean?
CGST — Central Goods and Services Tax
Tax collected by the Central Government on intra-state (within the same state) transactions.
SGST — State Goods and Services Tax
Tax collected by the State Government on intra-state transactions. CGST and SGST are always charged together.
IGST — Integrated Goods and Services Tax
Tax collected by the Central Government on inter-state (between different states) transactions. The Central Government then shares it with the destination state.
The Simple Rule
Remember This
Same state → CGST + SGST (split equally)
Different states → IGST (full rate)
The total tax rate remains the same. Only the split changes.
Example with 18% GST
| Scenario | Seller | Buyer | Tax Applied |
|---|---|---|---|
| Intra-state | Mumbai, Maharashtra | Pune, Maharashtra | CGST 9% + SGST 9% |
| Inter-state | Mumbai, Maharashtra | Bengaluru, Karnataka | IGST 18% |
In both cases, the buyer pays 18% tax. The only difference is how it's split between Central and State governments.
Real-World Examples
Example 1: Kirana Store in Delhi
You sell ₹1,000 worth of goods to a customer in Delhi. GST rate: 12%
- CGST: ₹60 (goes to Central Government)
- SGST: ₹60 (goes to Delhi Government)
- Total: ₹1,120
Example 2: Selling from Delhi to a Customer in UP
Same goods, ₹1,000, 12% GST — but buyer is in Uttar Pradesh.
- IGST: ₹120 (goes to Central Government, then shared with UP)
- Total: ₹1,120
Example 3: E-commerce Seller
If you sell on Amazon/Flipkart and your warehouse is in Maharashtra but the buyer is in Tamil Nadu — you charge IGST.
What About UTGST?
UTGST (Union Territory GST) replaces SGST for Union Territories without a legislature — like Chandigarh, Lakshadweep, and Andaman & Nicobar Islands. The rate is the same as SGST.
How BillCraft Handles This Automatically
When you use BillCraft, you just enter the seller's state and buyer's state. The app automatically determines whether to apply CGST+SGST or IGST and calculates the correct amounts.
Common Mistakes to Avoid
- Charging IGST for same-state sales — This is incorrect and can lead to ITC mismatches.
- Charging CGST+SGST for inter-state sales — Always use IGST for different states.
- Confusing place of supply — For services, the place of supply is usually the buyer's location.
- Wrong rate splits — CGST and SGST are always equal halves of the total rate.
Quick Reference Table
| Total GST Rate | CGST | SGST | IGST |
|---|---|---|---|
| 5% | 2.5% | 2.5% | 5% |
| 12% | 6% | 6% | 12% |
| 18% | 9% | 9% | 18% |
| 28% | 14% | 14% | 28% |