One tax, collected two ways
GST is a single charge on the customer, but it is divided between the centre and the state. How it divides depends on the place of supply — a legal concept that usually, but not always, means where the goods or services end up.
- Intra-state supply. Supplier and place of supply in the same state. The rate splits equally: CGST to the centre, SGST to the state.
- Inter-state supply. Different states, or a supply to an SEZ, or an export. The full rate is charged once as IGST.
- Union territories. UTGST replaces SGST and pairs with CGST in exactly the same way.
An 18% supply is 18% either way. The customer never pays more or less because of the split — only the heads on the invoice change.
The formulas
Other state → IGST = Taxable value × rate / 100
Dividing by 200 rather than 100 is simply the rate halved and applied in one step. At 18%, CGST and SGST are 9% each.
The split at every slab
| Rate | CGST | SGST | IGST | On ₹1,00,000 |
|---|---|---|---|---|
| 5% | 2.5% | 2.5% | 5% | ₹2,500 + ₹2,500 |
| 12% | 6% | 6% | 12% | ₹6,000 + ₹6,000 |
| 18% | 9% | 9% | 18% | ₹9,000 + ₹9,000 |
| 28% | 14% | 14% | 28% | ₹14,000 + ₹14,000 |
Worked example
₹50,000 at 18%, buyer in the same state
- Taxable value
- ₹50,000.00
- CGST at 9%
- ₹4,500.00
- SGST at 9%
- ₹4,500.00
- Total GST
- ₹9,000.00
- Invoice total
- ₹59,000.00
The identical transaction to a buyer in another state carries one IGST line of ₹9,000 and the same ₹59,000 total.
Getting place of supply right
This is where the errors happen, because place of supply is not always the buyer's billing address.
| Situation | Place of supply | Tax charged |
|---|---|---|
| Goods delivered within your state | Delivery address | CGST + SGST |
| Goods shipped to another state | Delivery address | IGST |
| Services to a registered buyer | Buyer's registered location | Depends on state |
| Services to an unregistered buyer | Address on record, else supplier location | Depends on state |
| Immovable property services | Where the property is | State of the property |
| Event or training, physical | Where the event is held | State of the event |
| Export of services | Outside India | Zero-rated (LUT or refund) |
| Supply to an SEZ unit | SEZ | Zero-rated, treated as inter-state |
Two cases catch people out regularly. A training session delivered physically in another state is taxed there, regardless of where either party is registered. And services connected to immovable property follow the property, not the client.
What goes wrong when the head is wrong
Charging IGST where CGST and SGST were due — or the reverse — is correctable, but the correction is tedious and it is your buyer who suffers in the meantime.
- The buyer cannot claim input tax credit until the invoice is fixed, because the credit heads will not match.
- You issue a credit note against the original invoice and raise a fresh one with the correct heads.
- Both documents have to be reported in the return for the period in which the correction is made.
- If the error crossed a financial year, the window for correction is limited — generally until the return for September of the following year, or the annual return, whichever is earlier.
Note
Confirm the buyer's state before the invoice goes out, not after. A thirty-second check prevents a credit note, a fresh invoice and an awkward conversation.
Setting off credit
Input tax credit cannot be used against any head you like. The order is prescribed, and getting it wrong leaves cash sitting in one ledger while you pay from another.
| Credit of | Set off against, in order |
|---|---|
| IGST | IGST, then CGST, then SGST |
| CGST | CGST, then IGST |
| SGST / UTGST | SGST, then IGST |
Note what is missing: CGST credit can never be set off against SGST, and SGST credit can never be set off against CGST. The two are different governments' money, and the system keeps them apart.
On the invoice
Show CGST and SGST as separate lines with their own rates and amounts. Do not combine them into one "GST 18%" line — a buyer's accounting system needs the heads separately, and a combined line is a common cause of credit mismatch notices.
If you are working backwards from a total rather than forwards from a taxable value, the reverse calculation gets you there, and the CGST SGST Calculator does the split.
Frequently asked questions
Is CGST always half of the total GST?
For intra-state supply, yes — CGST and SGST are each half the applicable rate. Inter-state supply has no CGST or SGST at all, only IGST at the full rate.
What replaces SGST in a union territory?
UTGST. It works identically to SGST and pairs with CGST in the same way.
Can I set off CGST credit against SGST liability?
No. CGST credit can only be used against CGST and then IGST. SGST credit only against SGST and then IGST. The two never cross.
Which state's SGST do I pay?
The state that is the place of supply, which for an intra-state transaction is your own state.
What if I charged the wrong head?
Issue a credit note against the original invoice and raise a corrected one. Until that is done, your buyer cannot claim the credit.