CGST, SGST and IGST: which one applies

The three taxes in one paragraph

GST is levied by both the Centre and the States. On a sale within a State, the Centre collects central tax (CGST) and the State collects State tax (SGST). In some Union territories, Union territory tax (UTGST) takes the place of SGST. On a sale across a State or Union territory boundary, the Centre levies integrated tax (IGST) under the IGST Act. The total tax the buyer pays at a given rate is the same either way; only the split changes.

Intra-State or inter-State: the legal test

Sections 7 and 8 of the IGST Act decide the nature of a supply by comparing two things: the location of the supplier and the place of supply.

• Same State, or same Union territory: intra-State, so CGST plus SGST or UTGST.
• Two different States, two different Union territories, or a State and a Union territory: inter-State, so IGST.
• Always inter-State, whatever the locations: imports, exports, and supplies to or by an SEZ unit or developer.

Note that the test is not where the buyer is registered or where the invoice is sent. It is where the place of supply falls, which the IGST Act defines separately for goods and services.

Place of supply for goods

Section 10 of the IGST Act sets the place of supply for goods within India:

• Goods that move: the location of the goods when the movement ends for delivery to the recipient, whoever arranges the transport.
• Bill to one party, ship to another: where goods are delivered to someone on the direction of a third person, the third person is treated as having received them, and the place of supply is that third person's principal place of business.
• Goods that do not move: the location of the goods at the time of delivery.
• Goods assembled or installed at site: the place of installation or assembly.
• Goods supplied on board a conveyance such as a train, aircraft or vessel: where they are taken on board.

Place of supply for services

Section 12 of the IGST Act sets a general rule and then a list of exceptions. The general rule, where both supplier and recipient are in India:

• Registered recipient: the location of the recipient.
• Unregistered recipient: the recipient's location where an address is on record, otherwise the location of the supplier.

The exceptions follow the activity rather than the customer. Services related to immovable property and hotel accommodation are supplied where the property is located. Restaurant, catering, personal grooming, fitness, beauty and health services are supplied where they are actually performed. Admission to an event or amusement park is supplied where the event is held or the park is located. Check Section 12 for the full list before applying the general rule.

How a rate is split

Since 22 September 2025, following the 56th GST Council meeting, most goods and services fall in two main rates: 5% and 18%, with a 40% rate for a short list of goods and services. Some goods are exempt and a few carry special rates. The integrated tax rate notification (Notification 9/2025-Integrated Tax (Rate)) sets the IGST rate, and the central tax rate notification sets CGST at half of it, with SGST or UTGST charged at the same rate as CGST.

Rates are fixed per HSN or SAC code, so always take the rate from the product's classification rather than from a general rule. The GST calculator does the split for any rate and amount.

Worked example

A manufacturer registered in Pune sells machine parts with a taxable value of ₹1,00,000, taxed at 18%.

The buyer pays ₹1,18,000 in both cases. What changes is which lines appear on the invoice and which ledger the tax goes to. Rule 46 requires the invoice to show the rate and amount of each tax separately, and for an inter-State supply to name the place of supply with the State. See GST invoice format for the full list of fields.

Now change one fact: the Ahmedabad buyer asks for the parts to be delivered straight to its own customer in Nagpur. The goods never leave Maharashtra, but under the bill-to ship-to rule in Section 10 the place of supply is the Ahmedabad buyer's principal place of business, so the Pune seller still charges IGST.

Common mistakes

• Charging CGST and SGST because the buyer's office is in the same State, when the goods are delivered to another State.
• Charging CGST and SGST on a supply to an SEZ unit in your own State. The IGST Act treats it as inter-State.
• Rounding CGST and SGST separately so that they no longer add up to the total tax.
• Using an old rate after the 22 September 2025 changes. Recheck the rate for each HSN code against the current notification.

Job work and goods sent on approval follow their own rules on when tax is charged at all. See delivery challans under GST and job work and ITC-04.