CGST vs SGST vs IGST: the difference and how place of supply decides it

GST is one tax collected in two halves. On a sale within your state you charge CGST (the Centre's half) and SGST or UTGST (the state's half), each at half the rate. On a sale where the place of supply is in another state, you charge IGST for the full rate, which the Centre later shares with the destination state. The rate your customer pays is identical; what changes is the split, and the split is decided by the place of supply rules, not by where the customer lives.

The four names and what they mean

Section 8 of the IGST Act defines intra-state supply: the location of the supplier and the place of supply are in the same state or UT. Section 7 defines inter-state supply: they are in different states or UTs, or the supply is an import, export, or to or from an SEZ. Note that a supply from a state to a UT is inter-state even if the UT is geographically inside the state, and a supply to an SEZ unit next door is inter-state.

The rate is always the total. An 18% item carries CGST 9% plus SGST 9%, or IGST 18%. A 5% item carries 2.5% plus 2.5%, or IGST 5%.

Why the split matters even though the customer pays the same

Three reasons make this more than bookkeeping:

1. Credit utilisation. IGST credit can be used against IGST, CGST and SGST in that order. CGST credit cannot be used against SGST and vice versa. Wrongly classifying a sale changes which pool of credit you build and use.
2. Returns. GSTR-1 asks for inter-state B2C sales separately (Table 5 above ₹1 lakh per invoice, Table 7 by state for the rest), and GSTR-3B Table 3.2 asks for inter-state supplies to unregistered persons state by state.
3. Correction cost. If you charged CGST and SGST where IGST was due, you must pay IGST again and claim a refund of the wrong tax under Section 77. There is no interest, but the cash goes out twice until the refund lands.

Place of supply for goods (Section 10 of the IGST Act)

The location of the supplier is usually your registered place of business. The place of supply for goods is decided by where the movement of goods ends.

• Goods that move (10(1)(a)): the place where movement terminates for delivery to the recipient. A Ludhiana hosiery maker ships to a Delhi store; the place of supply is Delhi; IGST.
• Bill-to ship-to (10(1)(b)): when goods are delivered to a third person on the direction of the buyer, the buyer is deemed to have received them and the place of supply is the buyer's principal place of business. Details in the example below.
• Goods that do not move (10(1)(c)): the location of the goods at the time of delivery. Selling a machine that stays installed in a rented factory in Pune to a Mumbai buyer: place of supply is Pune.
• Goods assembled or installed at site (10(1)(d)): the place of installation. A Kochi firm installs a solar plant on a Chennai rooftop: place of supply is Chennai.
• Goods supplied on board a conveyance (10(1)(e)): the place where the goods were taken on board.
• Imports (Section 11): the location of the importer; IGST is paid at customs. Exports: the location outside India; zero-rated.

Where the buyer's address on record is the only signal (say, an online order from a consumer), Section 10(1)(ca) inserted in 2023 says the place of supply for an unregistered recipient is the address recorded on the invoice, and where no address is recorded, the supplier's location.

Place of supply for services (Section 12 of the IGST Act)

For services where both the supplier and recipient are in India, the default rule in Section 12(2) is:

• Registered recipient: the location of the recipient (their GSTIN state).
• Unregistered recipient: the address on record if you have one; otherwise the location of the supplier.

The specific rules in Sections 12(3) to 12(14) override the default:

For services where either the supplier or recipient is outside India, Section 13 applies. The default is the location of the recipient, which is why exports of services by a Pune freelance designer to a US client are zero-rated when payment comes in foreign exchange and the other conditions of Section 2(6) of the IGST Act are met.

Online services from abroad (OIDAR). If you buy software subscriptions, cloud hosting or online ads from a supplier outside India and you are registered, you pay IGST under reverse charge. If the recipient is unregistered, the foreign supplier must register and pay (Section 14 of the IGST Act). Either way the place of supply is in India and the tax is IGST.

Worked examples across states

Example 1: simple intra-state. A Jaipur handicrafts shop (Rajasthan GSTIN, state code 08) sells wooden furniture worth ₹50,000 at 18% to a hotel in Udaipur (also 08). Place of supply: Udaipur, Rajasthan. Supplier location: Rajasthan. Intra-state. CGST ₹4,500 plus SGST ₹4,500. Invoice total ₹59,000.

Example 2: simple inter-state. The same shop ships identical furniture to a hotel in Goa (state code 30). Place of supply: Goa. IGST 18% = ₹9,000. Invoice total ₹59,000. The customer pays the same, but the Jaipur shop now reports it as an inter-state B2B supply.

Example 3: bill-to ship-to. A Surat textile trader (Gujarat, 24) receives an order from a Mumbai garment company (Maharashtra, 27) that asks for the fabric to be delivered directly to its job worker in Ahmedabad (Gujarat, 24). Two supplies happen:

• Surat trader to Mumbai company: under Section 10(1)(b), the Mumbai company is deemed to have received the goods, so the place of supply is Maharashtra. Surat charges IGST even though the truck never leaves Gujarat. On ₹2,00,000 of fabric at 5%: IGST ₹10,000.
• Mumbai company to Ahmedabad job worker (if it is a sale, or a job-work challan if not): place of supply Gujarat; Mumbai charges IGST 5% on its own invoice.

The e-way bill for this movement shows the Surat trader as consignor, the Mumbai company as bill-to, and the Ahmedabad address as ship-to. See our e-way bill guide.

Example 4: services to an unregistered customer in another state. A Bengaluru cloud kitchen caters a private party in Mysuru (same state): place of supply is where the catering is performed, Karnataka, CGST plus SGST. A Pune designer builds a logo for an unregistered boutique in Indore; she has the boutique's Indore address on the invoice; place of supply is Madhya Pradesh; IGST 18%. If she had no address on record at all, the place of supply would default to Maharashtra and she would charge CGST plus SGST.

Example 5: transporter. A Ludhiana transporter (Punjab, 03) carries goods for a registered Chandigarh (UT, 04) trader from Ludhiana to Delhi. Recipient is registered, so the place of supply is Chandigarh. Supplier is in Punjab; Chandigarh is a different territory; IGST. If the transporter is a GTA under reverse charge, the Chandigarh trader pays IGST under RCM and claims it as credit.

Example 6: hotel booking. A Kochi company books rooms in a Chennai hotel for its staff. Accommodation is an immovable-property service; place of supply is Tamil Nadu; the hotel is in Tamil Nadu; CGST plus Tamil Nadu SGST. The Kochi company cannot use that SGST credit in Kerala, which is why hotel GST outside your state usually becomes a cost.

Use the CGST, SGST and IGST calculator to check the split for any amount and rate; the harder part is deciding the place of supply, which the examples above walk through.

Reading state codes from the GSTIN

The first two digits of a GSTIN are the state code: 07 Delhi, 09 Uttar Pradesh, 19 West Bengal, 24 Gujarat, 27 Maharashtra, 29 Karnataka, 32 Kerala, 33 Tamil Nadu, 36 Telangana, 08 Rajasthan, 03 Punjab, 04 Chandigarh. For a registered recipient of services, this code usually is the place of supply. For goods, it is only a hint; the delivery address governs. Verify GSTINs before saving them with the GSTIN checker so the state code on your invoice is right.

Common invoice mistakes

• Using the customer's billing state for goods. A Delhi customer picking up goods from your Gurugram shop is an intra-Haryana supply (movement ends in Haryana at the counter), so CGST plus Haryana SGST. Many sellers wrongly charge IGST because the GSTIN starts with 07.
• Splitting IGST into CGST and SGST on the invoice. Some billing templates print all three columns; leave the wrong ones blank or zero, and make sure the total matches the rate once, not twice.
• Charging a Delhi customer SGST from Gujarat. SGST belongs to the state where the supply happens. There is no "Gujarat SGST" on an inter-state invoice.
• Ignoring the ship-to on marketplace orders. Marketplaces handle this in their invoice generators, but if you raise your own invoices for orders, use the delivery address.
• Multiple registrations. If you have a Maharashtra and a Karnataka GSTIN, a stock transfer between them is an inter-state supply with IGST even though it is the same PAN.
• Services performed in another state for a registered client. An interior designer from Kochi working on a Bengaluru office for a Bengaluru company charges IGST because the property is in Karnataka. If the client were a Kochi company owning that Bengaluru office, the place of supply is still Karnataka: IGST.
• Forgetting UTGST. For a Chandigarh or Ladakh registration, intra-territory invoices show CGST plus UTGST, not SGST.

The mandatory invoice fields for an inter-state supply include the place of supply with the state name and code (Rule 46(m)). Our GST invoice guide lists them all, and our GSTR-1 and GSTR-3B guide shows where inter-state supplies land in the returns.

How VyaparKit helps

The GST invoice and tax invoice tools take the place of supply from the customer record or the delivery state and apply CGST plus SGST or IGST automatically, so an inter-state bill never prints both. The CGST, SGST and IGST calculator shows the split for a quick quote, and the GSTIN checker confirms the state code before you save a customer. The place of supply for special cases (immovable property, events, bill-to ship-to) is still your call; set the state on the invoice and the tool follows it.

Next steps

• Check your saved customers: does each have a verified GSTIN and a correct state?
• For goods, set your billing to use the delivery state, and enter the ship-to address on bill-to ship-to orders.
• For services, list the specific-rule services you provide (property, events, training, transport) and note how the place of supply is decided for each.
• Review last quarter's invoices for any inter-state supply that shows CGST and SGST, and fix it under Section 77 before a notice arrives.