CGST, SGST and IGST explained with examples

GST in India is one tax with three labels. On a bill you will see either CGST and SGST together, or IGST on its own. The rate a customer pays is the same either way. What changes is which government collects it, and that depends on one question: is this sale inside one state, or between two?

This guide explains the difference in plain words, shows how to decide in tricky cases, and works through examples you can check with a calculator.

What each tax is

Tax	Full name	Collected by	Used for
CGST	Central Goods and Services Tax	Central Government	Sales within a state (with SGST)
SGST	State Goods and Services Tax	The state government	Sales within a state (with CGST)
UTGST	Union Territory Goods and Services Tax	The union territory	Replaces SGST in UTs without a legislature
IGST	Integrated Goods and Services Tax	Central Government, then shared with the consuming state	Sales between states, imports, exports and SEZ supplies

UTGST applies in the union territories that do not have their own legislature: Andaman and Nicobar Islands, Lakshadweep, Dadra and Nagar Haveli and Daman and Diu, Ladakh and Chandigarh. Delhi, Puducherry and Jammu and Kashmir have legislatures, so they use SGST.

The one rule that decides it

Section 7 and Section 8 of the IGST Act boil down to this:

• If your location and the place of supply are in the same state or union territory, it is an intra-state supply: charge CGST + SGST (or UTGST).
• If they are in different states, it is an inter-state supply: charge IGST.

The rate splits evenly for intra-state sales:

GST rate	Intra-state	Inter-state
5%	2.5% CGST + 2.5% SGST	5% IGST
18%	9% CGST + 9% SGST	18% IGST
40%	20% CGST + 20% SGST	40% IGST

The rates themselves changed on 22 September 2025. See New GST rates 2025–26 for what moved.

Imports, exports and supplies to or by units and developers in a Special Economic Zone (SEZ) are always treated as inter-state, so they come under IGST even when the SEZ is in your own state.

Place of supply: the part people get wrong

“Place of supply” is a legal term. It is not always the customer’s address on the bill.

For goods

• Goods that are delivered: the place where the movement ends, that is, where the goods are delivered.
• Bill-to-ship-to: when a buyer asks you to deliver to a third party, the place of supply is the principal place of business of the buyer who placed the order.
• Goods handed over at your counter: the place where the customer takes delivery, which is your shop.

For services

The general rule (Section 12 of the IGST Act, for suppliers and customers both in India):

• Registered customer: the customer’s location.
• Unregistered customer: the customer’s address on your records, if you have one; otherwise your own location.

There are special rules for services tied to a place, such as hotel stays and work on buildings (where the property is), restaurant meals (where the service is performed) and events. If your business is one of these, ask your accountant to confirm the place of supply once, then set it up in your billing.

Five worked examples

All examples use an item taxed at 18% with a taxable value of ₹10,000. The total tax is ₹1,800 every time; only the split changes.

1. Local sale. A wholesaler in Kolkata sells to a registered retailer in Kolkata. Both in West Bengal, so: CGST ₹900 + SGST ₹900. Invoice total ₹11,800.

2. Delivery to another state. The same wholesaler ships goods to a retailer in Patna, Bihar. Movement ends in Bihar, so: IGST ₹1,800, place of supply “Bihar (10)”.

3. Out-of-state customer at the counter. A tourist from Assam buys a saree at a shop in Varanasi and carries it home. Delivery happens at the shop in Uttar Pradesh, so: CGST ₹900 + SGST ₹900.

4. Bill-to-ship-to. A Mumbai company (Maharashtra) orders from a supplier in Pune (Maharashtra) and asks for delivery to its site in Goa. The place of supply follows the buyer who ordered, Maharashtra, so the Pune supplier charges CGST ₹900 + SGST ₹900.

5. Services across states. A chartered accountant registered in Delhi does work for a registered client in Bengaluru, Karnataka. For a registered customer, the place of supply is the customer’s location: IGST ₹1,800.

You can check any of these with the GST calculator, which shows the CGST/SGST and IGST split side by side.

Reading the state from a GSTIN

The first two digits of every GSTIN are the state code. A few common ones:

Code	State	Code	State
07	Delhi	24	Gujarat
09	Uttar Pradesh	27	Maharashtra
10	Bihar	29	Karnataka
19	West Bengal	33	Tamil Nadu

If your customer’s GSTIN starts with your own state code and the goods stay in your state, it is usually CGST + SGST. Check a number in seconds with the GSTIN validator.

How input tax credit is set off

You collect tax on sales and pay tax on purchases. The tax you paid (input tax credit) reduces what you owe, but the three credits are not fully interchangeable. Under Section 49 of the CGST Act and Rule 88A of the CGST Rules:

1. IGST credit is used first to pay IGST. What is left can pay CGST and SGST, in any order.
2. CGST credit pays CGST, then IGST. It can never pay SGST.
3. SGST credit pays SGST, then IGST. It can never pay CGST.

A quick example: this month you owe CGST ₹5,000, SGST ₹5,000 and IGST ₹2,000. Your credit is IGST ₹4,000, CGST ₹2,000 and SGST ₹3,000. IGST credit first clears the ₹2,000 IGST, and its remaining ₹2,000 can go to CGST or SGST. Say it goes to CGST: CGST due falls to ₹3,000, and your CGST credit of ₹2,000 brings it to ₹1,000. SGST credit of ₹3,000 brings SGST to ₹2,000. You pay ₹1,000 CGST + ₹2,000 SGST in cash. The GST portal does this arithmetic when you file GSTR-3B, but knowing it helps you plan cash.

What if you charged the wrong tax?

If you charged IGST on what was really an intra-state sale, or the other way round, you cannot just move the money from one head to the other. The law (Section 77 of the CGST Act and Section 19 of the IGST Act) asks you to pay the correct tax and then claim a refund of the tax wrongly paid. No interest is charged on the correct tax in this situation, but the refund takes time and paperwork. It is far easier to get the tax type right on the invoice.

Getting it right every time

Most mistakes come from typing the tax type by hand. In Invoiqo, the tax lines are worked out from your business state and the customer’s state, so a local customer gets CGST + SGST and an out-of-state delivery gets IGST, with the place of supply printed on the invoice. You can see how it works on the GST billing features page.

In short

Same rate, different label. Compare your location with the place of supply: same state means CGST + SGST, different state means IGST. Watch the special cases (counter sales, bill-to-ship-to, SEZ and exports), and remember that CGST and SGST credits never cross over. If you would like your billing to make that call for you, take a look at Invoiqo’s plans, starting with the free one.