CGST and SGST are charged together, in equal halves, on supplies within one state; the Centre collects CGST and the state collects SGST. IGST is charged by the Centre on inter-state supplies, imports and exports, and the revenue is later apportioned to the consuming state. The total rate is the same either way — 18% is 9% CGST + 9% SGST, or 18% IGST.
Every GST invoice shows tax under one or two heads: CGST and SGST for a sale within your state, or IGST for a sale to another state. The rate is the same either way; what changes is which government gets the money and how your input tax credit can be used.
This guide explains each component, how to decide which one to charge, how credits are set off, and how to fix an invoice where the wrong tax was charged.
What do CGST, SGST, UTGST and IGST stand for?
| Tax | Full name | Levied under | Collected by |
|---|---|---|---|
| CGST | Central Goods and Services Tax | CGST Act, 2017 | Central government |
| SGST | State Goods and Services Tax | Each state's SGST Act | State government |
| UTGST | Union Territory Goods and Services Tax | UTGST Act, 2017 | UT administration |
| IGST | Integrated Goods and Services Tax | IGST Act, 2017 | Central government, apportioned to the destination state |
GST is a "dual" tax: on an intra-state supply, the Centre and the state each levy their share at the same time. On an inter-state supply, a single IGST is levied by the Centre, and the state share is passed on to the state where the goods or services are consumed. This keeps GST destination-based. For the bigger picture, see what is GST.
When do you charge CGST + SGST and when IGST?
The decision depends on two things:
- Location of the supplier — the state where your registration is held (the first two digits of your GSTIN).
- Place of supply — determined by the rules in the IGST Act, which depend on whether it is goods or services, and on the type of service.
| Supplier location vs place of supply | Tax to charge |
|---|---|
| Same state | CGST + SGST |
| Same union territory without legislature | CGST + UTGST |
| Different states / UTs | IGST |
| Import into India | IGST (with customs duty for goods) |
| Export out of India | IGST, zero-rated (LUT or refund route) |
| Supply to an SEZ developer or unit | IGST, zero-rated — even within the same state |
Note that the test is place of supply, not the customer's billing address. A Bengaluru customer buying goods delivered in Mumbai from a Mumbai supplier generally creates an intra-state supply in Maharashtra, because for goods involving movement the place of supply is where the movement ends. Read place of supply rules for the full set of cases.
Worked example: same sale, two different tax heads
An Ahmedabad electronics distributor sells goods worth ₹1,00,000 taxed at 18%.
Case 1 — buyer in Vadodara (Gujarat, intra-state):
| Amount (₹) | |
|---|---|
| Taxable value | 1,00,000 |
| CGST @ 9% | 9,000 |
| SGST @ 9% | 9,000 |
| Invoice total | 1,18,000 |
Case 2 — buyer in Indore (Madhya Pradesh, inter-state):
| Amount (₹) | |
|---|---|
| Taxable value | 1,00,000 |
| IGST @ 18% | 18,000 |
| Invoice total | 1,18,000 |
The customer pays the same total. The difference is which ledgers the tax hits and how both parties can use the credit.
How is input tax credit set off between IGST, CGST and SGST?
Credit you receive on purchases sits in your electronic credit ledger under three heads. When you pay output tax in GSTR-3B, credits are used in an order set by section 49 of the CGST Act and the rules under it:
- IGST credit must be used first against IGST liability, and then against CGST and SGST/UTGST liability (in any order or proportion the rules permit).
- Only after IGST credit is fully used can CGST and SGST credit be used.
- CGST credit can pay CGST, then IGST — never SGST/UTGST.
- SGST/UTGST credit can pay SGST/UTGST, then IGST — never CGST.
| Credit available | Can pay IGST | Can pay CGST | Can pay SGST/UTGST |
|---|---|---|---|
| IGST | Yes (first) | Yes | Yes |
| CGST | Yes | Yes | No |
| SGST/UTGST | Yes | No | Yes |
Set-off example
A Pune manufacturer has, for the month:
- Output liability: IGST ₹40,000; CGST ₹25,000; SGST ₹25,000.
- Credit available: IGST ₹60,000; CGST ₹10,000; SGST ₹15,000.
Step 1 — IGST credit against IGST: ₹40,000 used; ₹20,000 IGST credit remains. Step 2 — remaining IGST credit ₹20,000 against CGST and SGST, say ₹10,000 each. CGST liability falls to ₹15,000; SGST to ₹15,000. Step 3 — CGST credit ₹10,000 against CGST: ₹5,000 CGST remains payable in cash. Step 4 — SGST credit ₹15,000 against SGST: SGST fully paid.
Cash payable: ₹5,000 CGST. Notice that if the manufacturer had extra SGST credit, it could not have been used to cover that CGST shortfall. Splitting the remaining IGST credit differently in step 2 (for example ₹15,000 to CGST, ₹5,000 to SGST) would have reduced cash to nil — the GST portal's set-off utility helps optimise this.
What if you charged the wrong tax?
Charging CGST+SGST where IGST was due (or the reverse) is a common error, and it cannot be fixed by simply transferring the amount between heads.
The law (section 77 of the CGST Act and section 19 of the IGST Act) provides that:
- You must pay the correct tax under the correct head.
- You can claim a refund of the tax wrongly paid.
- No interest is charged on the correct tax paid in this way, when the wrong tax was paid as a genuine misclassification.
In practice, if the error is found before filing the return, correct the invoice (with a credit note and a fresh invoice where needed) and report it correctly. If it is found after the return is filed, pay the correct tax and apply for a refund of the wrong head. Either way, your customer's ITC is affected, so tell them promptly.
How should CGST, SGST and IGST appear on an invoice?
The invoice must show the rate and amount of each tax head separately. For an intra-state supply that means two columns (or lines) — CGST and SGST — each at half the total rate. For an inter-state supply, one IGST column at the full rate.
| Field | Intra-state invoice | Inter-state invoice |
|---|---|---|
| Place of supply | Your own state | Recipient's state, with name and code |
| Tax columns | CGST rate & amount, SGST/UTGST rate & amount | IGST rate & amount |
| Example on ₹10,000 at 18% | CGST 9% ₹900, SGST 9% ₹900 | IGST 18% ₹1,800 |
| GSTR-1 reporting | CGST and SGST fields | IGST field |
A good habit is to print a tax summary by rate at the bottom of each invoice — for example, "Taxable ₹10,000 at 18%: CGST ₹900, SGST ₹900" — so the customer's accountant can reconcile it quickly with GSTR-2B.
How does this affect your customer's input tax credit?
The tax head you charge decides which head your customer's credit goes into. If you wrongly charge CGST+SGST on an inter-state supply, the customer in another state cannot use that credit at all, because CGST+SGST of your state does not flow into their state's ledger. If you wrongly charge IGST on an intra-state supply, the credit lands in the customer's IGST ledger; it is usable, but the supply itself is misreported and both sides need to correct it. In either case the customer will ask for a corrected invoice, so getting the head right at the first attempt protects the relationship as much as your own compliance.
Branch transfers between states
Stock sent from your Maharashtra warehouse to your own Karnataka branch is a supply between distinct persons (two GSTINs under one PAN) and attracts IGST, even without a sale. The receiving branch claims the IGST as credit. Many first-time multi-state businesses forget this and move stock on a delivery challan alone.
Special situations: SEZs, exports and stock transfers
A few supplies do not follow the simple "same state or not" test, and they trip up many small businesses:
| Situation | Tax head | Why |
|---|---|---|
| Supply to an SEZ unit or developer, even in your own state | IGST (or zero-rated under LUT) | The IGST Act treats supplies to SEZs as inter-state supplies |
| Export of goods or services | IGST, or zero-rated under bond/LUT | Exports are treated as inter-state supplies |
| Branch transfer to your own registration in another state | IGST | Each state registration is a distinct person |
| Supply within a UT without a legislature (e.g. Chandigarh) | CGST + UTGST | UTGST replaces SGST there |
| Import of goods | IGST (with customs duty) | Imports are treated as inter-state supplies |
Example. A Pune packaging firm supplies cartons worth ₹2,00,000 at 18% to an SEZ unit in Pune. Although both are in Maharashtra, it must not charge CGST and SGST. If it supplies under a letter of undertaking, it issues the invoice without tax as a zero-rated supply; if it pays tax, it charges IGST of ₹36,000 and can claim a refund later. Charging ₹18,000 CGST plus ₹18,000 SGST would be the wrong head and would have to be corrected.
A branch transfer is another common trap. If the same firm sends ₹5,00,000 of stock to its own Bengaluru warehouse, which has a separate GSTIN, it must issue a tax invoice with IGST at the applicable rate, even though no outside customer is involved. The Bengaluru branch then claims that IGST as credit.
Common mistakes with CGST, SGST and IGST
- Deciding by billing address rather than by place of supply.
- Charging CGST+SGST on supplies to an SEZ in your own state — these are inter-state.
- Charging IGST on intra-state "bill-to" sales just because the buyer's head office is elsewhere.
- Using SGST instead of UTGST for Chandigarh, Ladakh or other UTs without a legislature.
- Expecting excess CGST credit to pay SGST. It cannot.
- Printing the rate but not the split. Intra-state invoices must show both CGST and SGST amounts and rates.
- Not recording place of supply on inter-state invoices.
Billing Software by Betterwork reads your state from your GSTIN, compares it with the customer's place of supply and applies CGST+SGST, UTGST or IGST automatically, with a tax-head summary in the invoice and in your GSTR-1 export. To check the arithmetic on a single price, use the GST calculator.
Key takeaways
- CGST + SGST (or UTGST) apply to intra-state supplies; IGST applies to inter-state supplies, imports, exports and SEZ supplies.
- The rate is the same either way — only the collecting government and credit rules differ.
- The deciding factor is the place of supply, not the customer's billing address.
- IGST credit is used first; CGST credit never pays SGST, and SGST credit never pays CGST.
- Wrong tax head? Pay the correct tax and claim a refund of the wrong one; no interest in genuine cases.
This guide is general information, not tax advice. Rules last checked on 20 October 2026; confirm with your tax professional for your situation.