What Is CGST, SGST, and IGST?
If you're running a business in India, you've probably seen these three letters everywhere: CGST, SGST, and IGST. But what do they actually mean? When do you use each one? And most importantly, how do they affect your invoices?
Here's the simple truth: these three taxes form the backbone of India's GST system. When goods are supplied within the same state, both CGST and SGST are collected. When goods are supplied between states, only IGST is collected.
This guide explains exactly when and how to use each, with real examples and clear tables. By the end, you'll know exactly which GST component applies to your transactions.
What Is GST? The Foundation
Before we break down CGST, SGST, and IGST, let's understand what GST is.
Goods and Services Tax (GST) is India's unified indirect tax system introduced on July 1, 2017. It replaced multiple taxes like VAT, excise duty, and service tax with a single tax applied at each stage of production and sale.
The key principle: GST is a destination-based tax. This means the tax revenue goes to the state where goods/services are consumed, not where they're manufactured.
GST is divided into four components based on the location of buyer and seller:
CGST — Central GST
SGST — State GST
IGST — Integrated GST
UTGST — Union Territory GST (for Union Territories)
The first three are most common. Let's break them down.
CGST vs SGST vs IGST: Quick Comparison Table
| Aspect |
CGST |
SGST |
IGST |
| Full Form |
Central GST |
State GST |
Integrated GST |
| Who Collects |
Central Government |
State Government |
Central Government |
| Applicable When |
Intra-state sales (same state) |
Intra-state sales (same state) |
Inter-state sales (different states) |
| Rate |
Half of total GST (usually 9% on 18%) |
Half of total GST (usually 9% on 18%) |
Full GST rate (usually 18%) |
| Example |
Seller & buyer in Maharashtra |
Seller & buyer in Maharashtra |
Seller in Maharashtra, buyer in Delhi |
| Revenue Goes To |
Central Government |
State Government |
Centre (distributed to states) |
CGST — Central Goods and Services Tax
What Is CGST?
CGST is the Central Goods and Services Tax levied by the Central Government on intra-state supplies of both goods and services.
Key points:
Applied when buyer and seller are in the same state
Collected by the Central Government
Tax revenue goes to the Central Government's account
Rate is typically half of the total GST rate
Central Goods and Services Tax
How Is CGST Calculated?
CGST is calculated on the taxable value of goods/services.
Formula: Taxable Value × (CGST Rate / 100)
Example:
You sell a laptop for ₹50,000 to a customer in your state
GST rate is 18% (half for CGST = 9%, half for SGST = 9%)
CGST = ₹50,000 × 9% = ₹4,500
This ₹4,500 goes to the Central Government
SGST — State Goods and Services Tax
What Is SGST?
SGST is the State Goods and Services Tax levied by the State Government on intra-state supplies of goods and services.
Key points:
Applied when buyer and seller are in the same state
Collected by the State Government
Tax revenue goes to the respective State Government
Rate is typically half of the total GST rate
State Goods and Services Tax
How Is SGST Calculated?
SGST is calculated the same way as CGST — on the taxable value.
Formula: Taxable Value × (SGST Rate / 100)
Example:
Same laptop: ₹50,000 to a customer in your state
SGST rate is 9%
SGST = ₹50,000 × 9% = ₹4,500
This ₹4,500 goes to the State Government
Combined CGST + SGST = Total GST for Intra-State Sales
Total GST on the ₹50,000 laptop:
IGST — Integrated Goods and Services Tax
What Is IGST?
IGST is the Integrated Goods and Services Tax levied on inter-state supply of goods and services. It is collected by the central government and later apportioned between the centre and states.
Key points:
Applied when buyer and seller are in different states
Collected by the Central Government
Single tax (not split between CGST and SGST)
Rate is the full GST rate (e.g., 18%, not 9% + 9%)
Revenue is later distributed between Centre and the consuming state
Integrated Goods and Services Tax
How Is IGST Calculated?
IGST is calculated on the taxable value, just like CGST/SGST, but as a single tax.
Formula: Taxable Value × (IGST Rate / 100)
Example:
You (in Maharashtra) sell the same laptop for ₹50,000 to a customer in Delhi
IGST rate is 18%
IGST = ₹50,000 × 18% = ₹9,000
This ₹9,000 goes to the Central Government (later shared with Delhi)
Invoice Total: ₹59,000
Key Insight: Same Total Tax, Different Structure
Notice both transactions result in the same ₹9,000 tax:
Intra-state: ₹4,500 CGST + ₹4,500 SGST = ₹9,000
Inter-state: ₹9,000 IGST = ₹9,000
The total tax is the same for the buyer. The only difference is how it's split and distributed.
Intra-State vs Inter-State: When Do You Use CGST+SGST vs IGST?
This is the most critical distinction. Your entire invoicing depends on understanding this.
Intra-State Transaction (Same State) = CGST + SGST
When it applies:
Example:
Seller: ABC Ltd, Bangalore (Karnataka)
Buyer: XYZ Retail, Bangalore (Karnataka)
Transaction Type: Intra-state
GST Applied: CGST + SGST
Tax Calculation (18% rate):
Inter-State Transaction (Different States) = IGST
When it applies:
Example:
Seller: ABC Ltd, Bangalore (Karnataka)
Buyer: XYZ Retail, Mumbai (Maharashtra)
Transaction Type: Inter-state
GST Applied: IGST
Tax Calculation (18% rate):
How to Determine Buyer's State
Always check the buyer's billing address (or registered address for GST purposes).
Common Mistakes:
❌ Using buyer's temporary address (wrong)
❌ Assuming state based on phone number (wrong)
✅ Using buyer's registered GST address (correct)
✅ Confirming with buyer if unsure (correct)
Real-World Examples: CGST vs SGST vs IGST
Example 1: Freelancer in Delhi Selling Services
Scenario:
Since both are in Delhi (intra-state):
CGST = ₹25,000 × 9% = ₹2,250
SGST = ₹25,000 × 9% = ₹2,250
Total GST: ₹4,500
Invoice Total: ₹29,500
Invoice Shows:
Service: Web Design
Amount: ₹25,000
CGST (9%): ₹2,250
SGST (9%): ₹2,250
Total: ₹29,500
Example 2: Business in Maharashtra Selling to Business in Karnataka
Scenario:
Seller: TechCorp, Mumbai (Maharashtra)
Buyer: RetailChain Ltd, Bangalore (Karnataka)
Product: 100 units of software license
Amount: ₹50,000
GST Rate: 18%
Since they're in different states (inter-state):
Invoice Shows:
Product: Software License (100 units)
Amount: ₹50,000
IGST (18%): ₹9,000
Total: ₹59,000
Scenario (3-step supply chain):
Step 1: Manufacturer (Delhi) → Dealer (Delhi)
Amount: ₹10,000
GST Rate: 12%
CGST (6%) = ₹600
SGST (6%) = ₹600
Total GST: ₹1,200
Dealer pays: ₹11,200
Step 2: Dealer (Delhi) → Retailer (Mumbai)
Input Tax Credit Available:
Dealer had paid ₹1,200 (CGST + SGST) in Step 1
Dealer collects ₹1,800 (IGST) in Step 2
Dealer's net GST liability = ₹1,800 - ₹1,200 = ₹600
Step 3: Retailer (Mumbai) → End Customer (Mumbai)
Resale Price: ₹18,000
GST Rate: 12%
CGST (6%) = ₹1,080
SGST (6%) = ₹1,080
Total GST: ₹2,160
Customer pays: ₹20,160
Input Tax Credit:
Retailer paid ₹1,800 (IGST) in Step 2
Retailer collects ₹2,160 (CGST + SGST) in Step 3
IGST credit can offset CGST and SGST
This shows how GST works seamlessly across state borders with input tax credit.
How to Apply Correct GST on Your Invoice
When creating an invoice, follow this checklist:
Step 1: Identify Transaction Type
[ ] Buyer and seller in same state? → Use CGST + SGST
[ ] Buyer and seller in different states? → Use IGST
[ ] Union Territory involved? → Use CGST + UTGST
Step 2: Find Applicable GST Rate
Check HSN/SAC code
Verify current rate (18%, 5%, etc.)
Confirm with CA if unsure
Step 3: Calculate Tax Components
For Intra-State (CGST + SGST):
For Inter-State (IGST):
- IGST = Taxable Amount × (Rate / 100)
Step 4: Show on Invoice
Invoice must clearly show:
Creating Compliant GST Invoices with Correct CGST/SGST/IGST
Getting the tax components right is critical for compliance. One mistake triggers notices and penalties.
Best Practice: Use a Tool That Auto-Calculates
Instead of manually calculating CGST, SGST, and IGST, use software that automatically applies the correct tax based on buyer/seller location.
You can create free GST invoices at freeinvoicebill.com with automatic CGST/SGST/IGST calculation:
✅ Enter buyer's state → System auto-applies CGST+SGST or IGST
✅ Select GST rate → Tax is calculated instantly
✅ Download PDF → Ready to send to clients
✅ No login required → Use immediately
The tool handles all the complexity so you don't have to manually split taxes.
One of GST's biggest benefits is Input Tax Credit (ITC) — the ability to claim credit for taxes paid on purchases against taxes owed on sales.
But ITC for CGST, SGST, and IGST follows specific rules.
ITC Rules by Tax Component
CGST Credit:
SGST Credit:
IGST Credit:
Can be used to offset IGST, CGST, or SGST liability (most flexible)
This is why IGST is often called "integrated" — it flows seamlessly
Real Example: Claiming ITC
Scenario:
You bought raw materials for ₹10,000 (intra-state, 18% GST)
CGST paid: ₹900
SGST paid: ₹900
You sold finished goods for ₹25,000 (inter-state, 18% GST)
IGST to pay: ₹4,500
ITC Claim:
Use ₹900 CGST credit → Reduce CGST liability (if any)
Use ₹900 SGST credit → Reduce SGST liability (if any)
Use remaining credit against IGST:
CGST Rate vs SGST Rate vs IGST Rate
All three components use the same rate structure (0%, 5%, 18%, 40%), but are split differently.
18% GST Rate Breakdown
| Component |
Rate |
Applies When |
Goes To |
| CGST |
9% |
Intra-state |
Central Govt |
| SGST |
9% |
Intra-state |
State Govt |
| IGST |
18% |
Inter-state |
Central Govt (distributed) |
5% GST Rate Breakdown
| Component |
Rate |
Applies When |
Goes To |
| CGST |
2.5% |
Intra-state |
Central Govt |
| SGST |
2.5% |
Intra-state |
State Govt |
| IGST |
5% |
Inter-state |
Central Govt (distributed) |
The rates are consistent — only the split changes based on transaction type.
CGST vs SGST: Key Differences Summarized
| Point |
CGST |
SGST |
| Levied By |
Central Government |
State Government |
| Revenue Goes To |
Central Government |
State Government |
| Applicable |
Intra-state sales |
Intra-state sales |
| Rate |
Equal to SGST (usually 9% on 18%) |
Equal to CGST (usually 9% on 18%) |
| Governed By |
CGST Act, 2017 |
State SGST Act, 2017 |
| ITC Usage |
Can offset CGST/IGST only |
Can offset SGST/IGST |
| Example |
Seller & Buyer in UP |
Seller & Buyer in UP |
FAQ: Common Questions About CGST, SGST, and IGST
Q1: Do I charge both CGST and SGST on the same invoice?
A: Yes, but only for intra-state transactions. You charge CGST and SGST together on the same invoice when buyer and seller are in the same state. For inter-state sales, you charge only IGST.
Q2: What's the difference between CGST and SGST percentage?
A: There's no difference in percentage. On an 18% GST transaction:
Q3: When do I use IGST instead of CGST and SGST?
A: Use IGST when your buyer is in a different state than you. CGST + SGST apply only for intra-state (same-state) sales.
Q4: Can I claim SGST credit against CGST liability?
A: No. SGST credit can be used against SGST or IGST liability, not CGST. Each tax component has specific credit rules.
Q5: What if I don't know the buyer's state?
A: Always ask the buyer for their registered address or GST registration state. Using the wrong state triggers compliance issues. When in doubt, err on the side of IGST (higher safety).
Q6: Does IGST rate differ from CGST + SGST combined?
A: No. The total tax is always the same:
Q7: How do I show CGST and SGST on an invoice?
A: Show both separately:
Taxable Amount: ₹10,000
CGST (9%): ₹900
SGST (9%): ₹900
Total GST: ₹1,800
Invoice Total: ₹11,800
Q8: What is UTGST?
A: UTGST (Union Territory GST) is similar to SGST but applies in Union Territories without a legislature (like Chandigarh, Lakshadweep). It's paired with CGST for intra-UT transactions.
Q9: Can a small business claim ITC on CGST, SGST, IGST?
A: Yes, any GST-registered business can claim ITC, including small businesses. You must maintain proper documentation and file GSTR returns.
Q10: What happens if I invoice with the wrong CGST/SGST/IGST?
A: Tax authorities will issue a notice, demand payment + interest + penalty. It can trigger an audit. Always verify the correct tax component before invoicing.
How State Codes Determine CGST, SGST, or IGST
Each Indian state and union territory has a 2-digit state code. The buyer's state code determines whether you use CGST+SGST or IGST.
Common State Codes
| State |
Code |
| Andhra Pradesh |
28 |
| Bihar |
10 |
| Delhi |
07 |
| Gujarat |
24 |
| Haryana |
06 |
| Himachal Pradesh |
02 |
| Jharkhand |
20 |
| Karnataka |
29 |
| Kerala |
32 |
| Madhya Pradesh |
23 |
| Maharashtra |
27 |
| Tamil Nadu |
33 |
| Telangana |
36 |
| Uttar Pradesh |
09 |
| West Bengal |
19 |
How to Use:
Invoicing Best Practices for CGST, SGST, IGST
Before Creating an Invoice:
Verify Buyer's State:
Check their registered address
Confirm GST registration state
Don't assume based on phone number
Determine Transaction Type:
Confirm GST Rate:
Check HSN/SAC code
Verify 2026 rate (0%, 5%, 18%, 40%)
Consult your CA if unsure
Use Compliant Software:
Manually calculating = Risk of errors
Use software = Auto-correct tax splits
https://freeinvoicebill.com auto-applies CGST/SGST/IGST based on buyer location
Double-Check Before Sending:
Taxable amount correct?
CGST or IGST applied? (not both)
SGST shown only if intra-state?
Total calculation accurate?
Compliance Tips for GST Registration & CGST/SGST/IGST Filing
GST Return Filing:
When you file GST returns (GSTR-1, GSTR-3B), you must report:
GSTR-1: Outward supplies with CGST, SGST, IGST separately
GSTR-3B: Tax liability, ITC claimed, and net tax payable
Mistakes in CGST/SGST/IGST split trigger notices and penalties.
Key Compliance Points:
✅ Always use correct state code for buyer
✅ Split CGST and SGST equally for intra-state sales
✅ Use full GST rate for IGST (not half rates)
✅ Maintain invoices for 6+ years
✅ File GSTR returns on time
✅ Claim ITC correctly based on tax component rules
✅ Keep documentation for audits
Freeinvoicebill.com — Create compliant GST invoices:
✅ Auto-detects intra-state vs inter-state based on buyer state
✅ Automatically applies CGST+SGST or IGST
✅ Calculates taxes with zero manual errors
✅ Downloads as PDF instantly
✅ No login required
✅ No data stored on servers (privacy-first)
Official Resources
GST Portal: gst.gov.in
CBIC Website: cbic.gov.in
State GST Offices: For rate clarifications
Your CA: For business-specific advice
Final Checklist: CGST vs SGST vs IGST
Before you invoice, verify:
Buyer's state identified correctly
Buyer's state = Your state?
Yes → Use CGST + SGST
No → Use IGST
GST rate verified (0%, 5%, 18%, 40%)
Taxable amount calculated (after discounts, before tax)
Taxes split correctly (CGST=SGST for intra-state; single IGST for inter-state)
Invoice totals verified
Invoice shows all 16 mandatory GST fields
Ready to send to client
Key Takeaways
CGST (Central GST) + SGST (State GST) apply to intra-state sales (same state). They're split 50-50 from the total GST rate.
IGST (Integrated GST) applies to inter-state sales (different states). It's the full GST rate collected by the centre and distributed to states.
Total tax is always the same:
The key to correct invoicing: Identify buyer's state first. Everything else flows from there.
Use tools to avoid errors: Manual tax calculations = risk. Software that auto-applies CGST/SGST/IGST = compliance.
ITC rules differ by component: IGST is most flexible; CGST and SGST have specific limitations.
State codes determine transaction type: Buyer's state code is your north star for deciding CGST+SGST vs IGST.
Get it right, and your business stays compliant. Get it wrong, and tax notices follow. The difference is just a few clicks with the right tool.
