One tax, collected two ways
GST is a single tax on the customer, but it is divided between two governments. How it divides depends entirely on the place of supply, not on where you are sitting or where the invoice was typed.
- 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.
An 18% rate is 18% either way. The customer never pays more or less because of the split — only the heads change.
The formula
Other state → IGST = Taxable value × rate / 100
Worked example
₹50,000 at 18%, same state
- Taxable value
- ₹50,000.00
- CGST at 9%
- ₹4,500.00
- SGST at 9%
- ₹4,500.00
- Total tax
- ₹9,000.00
- Invoice total
- ₹59,000.00
Same transaction to a client in another state: one IGST line of ₹9,000, and an identical invoice total of ₹59,000.
Getting place of supply right
| 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 |
| Export of services | Outside India | Zero-rated (LUT or refund) |
Charging the wrong head is a correctable but annoying error: the buyer cannot claim credit until it is fixed, and fixing it means a credit note and a fresh invoice. It is worth confirming the buyer's state before the invoice goes out, not after.
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 union territories?
UTGST. It works identically to SGST and pairs with CGST in the same way.
Can I claim IGST credit against CGST liability?
IGST credit can be set off against IGST first, then CGST, then SGST, following the order prescribed in the credit utilisation rules.
Which state's SGST do I pay?
The state that is the place of supply, which for intra-state transactions is your own state.