CGST SGST IGST: The Difference and When to Charge Each

CGST SGST IGST are three heads of the same GST. On a sale within one state, the tax is split equally into CGST (for the Centre) and SGST (for the state). On a sale from one state to another, the whole tax is charged as IGST. At an example rate of 18%, an intra-state sale shows 9% CGST + 9% SGST, and an inter-state sale shows 18% IGST. The buyer pays the same total either way; what changes is which head the tax goes under.

For a wholesaler, the question comes up on every invoice: is this supply intra-state or inter-state? Most kirana suppliers sell within their own state, but a distributor near a state border, or one supplying a few towns across the line, will deal with both.

This is general guidance. Place-of-supply rules have special cases, so confirm anything unusual with your chartered accountant.

CGST SGST IGST in one table

	CGST	SGST / UTGST	IGST
Full form	Central GST	State GST / Union Territory GST	Integrated GST
When charged	Intra-state supply	Intra-state supply	Inter-state supply, imports
Rate	Half the GST rate	Half the GST rate	Full GST rate
Collected by	Centre	State / UT	Centre, then shared with the destination state

UTGST replaces SGST in union territories without their own legislature, such as Chandigarh or Ladakh. Delhi, Puducherry and Jammu and Kashmir have legislatures, so they use SGST.

Intra-state vs inter-state: how to decide

For goods, the deciding question is: where is the supplier, and what is the place of supply?

• The place of supply of goods is generally the location where the movement of goods ends for delivery to the buyer.
• If the supplier and the place of supply are in the same state, it is intra-state: charge CGST + SGST.
• If they are in different states, it is inter-state: charge IGST.

Using GSTIN state codes

A GSTIN has 15 characters. The first two digits are the state code, the next ten are the PAN, followed by an entity number, a default letter and a check character. For B2B sales, comparing the first two digits of the seller's and buyer's GSTINs is a quick way to see whether the sale is normally intra-state or inter-state.

State code	State
06	Haryana
07	Delhi
08	Rajasthan
09	Uttar Pradesh
24	Gujarat
27	Maharashtra
29	Karnataka
33	Tamil Nadu

So a wholesaler with a GSTIN starting 07 (Delhi) delivering to a retailer whose GSTIN starts 09 (Uttar Pradesh) is generally making an inter-state supply and charges IGST.

Special cases to check with your CA

• Bill-to ship-to. You bill one party but deliver to another, perhaps in a different state.
• Buyer registered in one state, goods delivered in another. The delivery address can matter more than the GSTIN.
• Unregistered buyers in another state. There is no GSTIN to compare, but the supply can still be inter-state.
• Branches. A business with registrations in two states has a separate GSTIN for each.

Worked examples

Take goods with a taxable value of ₹10,000 at an example rate of 18%.

	Intra-state (Delhi to Delhi)	Inter-state (Delhi to UP)
Taxable value	₹10,000	₹10,000
CGST 9%	₹900	–
SGST 9%	₹900	–
IGST 18%	–	₹1,800
Invoice total	₹11,800	₹11,800

Now at an example rate of 5% on ₹4,000: intra-state gives ₹100 CGST + ₹100 SGST, and inter-state gives ₹200 IGST. The total is ₹4,200 either way.

If your prices include GST, first work back the taxable value with the formula in our guide to the GST inclusive price, then split the tax.

Rounding CGST and SGST

When the tax comes to an odd number of paise, the two halves cannot both be equal. Decide on one consistent method, for example putting the extra paisa in one head, so CGST + SGST always adds back to the total tax.

What the invoice should show

• Intra-state: separate CGST and SGST columns, each with rate and amount.
• Inter-state: an IGST column with rate and amount, and the place of supply with the state name.

The full list of fields is in our article on the GST invoice format.

How input tax credit works across the heads

A regular-scheme buyer can use the GST they paid on purchases to pay the GST they owe on sales. The heads are linked, but not freely:

• IGST credit is used first against IGST, and then against CGST and SGST.
• CGST credit can be used against CGST and IGST, but not SGST.
• SGST credit can be used against SGST and IGST, but not CGST.

This is why the correct head matters to your buyer, not only to you. Your CA or accounting software handles the set-off order when returns are filed.

Charging the wrong head

If you charge CGST + SGST where IGST was due, or the other way round, the fix is generally not a simple adjustment. You pay the tax under the correct head and claim a refund of the tax paid under the wrong one. That takes time and paperwork for you and can disturb your buyer's credit. A few checks prevent most of these errors:

• Confirm the buyer's GSTIN and state when you onboard them.
• Store the delivery address separately if it differs from the billing address.
• Look at the state codes on every new customer's first invoice.

How MaalMitra helps

MaalMitra decides the tax head on the invoice from the GSTINs, so billing staff do not have to remember which customer is in which state.

• CGST + SGST or IGST by GSTIN state. The GST tax invoice compares the state codes in the seller's and buyer's GSTINs. Same state gives CGST and SGST in equal halves, with any odd paisa handled so the two always add back to the total; different states gives IGST.
• Buyers without a GSTIN are treated as within the seller's state, so check those cases with your CA if you deliver across a state line.
• Invoice on delivery for delivered quantities only, numbered per wholesaler per financial year, with HSN, taxable value, a rate-wise summary, print and PDF.

MaalMitra does not file returns or work out your input tax credit set-off; that stays with your CA or accounting software.

The bottom line

CGST SGST IGST are not three separate taxes on top of each other. Within a state, split the tax equally into CGST and SGST; across states, charge it all as IGST. Use the place of supply and the GSTIN state codes to decide, keep rounding consistent, and ask your CA about bill-to ship-to and other special cases.

Want the right tax head on every invoice without checking state codes by hand? Get started free with MaalMitra.