CGST, SGST and IGST: What's the Difference

CGST and SGST apply together on a sale within the same state, splitting the GST equally between the Central government (CGST) and the State government (SGST). IGST applies as a single combined tax on interstate sales, collected by the Centre and later shared with the destination state. The one question that decides which applies: is the buyer in the same state as the seller, or a different one?

The simple rule

• Same state (intrastate): GST splits into CGST + SGST, half each.
• Different state (interstate): GST is charged as one IGST, equal to the full rate.

The total tax the customer pays is identical either way. Only the split and where the money goes changes.

What each one is

How the split works

If the GST rate is 18%, then on an intrastate sale it becomes 9% CGST + 9% SGST. On an interstate sale it's simply 18% IGST. The rate is always halved for the CGST/SGST split. (Under GST 2.0, from 22 September 2025, the main slabs are 5%, 18% and 40%; the older 12% and 28% slabs were removed.)

Worked example (intrastate)

A shop in Jammu & Kashmir sells goods worth ₹20,000 at 18% to a customer in J&K:

• CGST 9% = ₹1,800
• SGST 9% = ₹1,800
• Total GST = ₹3,600
• Invoice total = ₹23,600

Worked example (interstate)

The same shop sells ₹20,000 goods at 18% to a customer in Punjab:

• IGST 18% = ₹3,600
• Invoice total = ₹23,600

Same ₹3,600 tax, but here it's one IGST line instead of two.

Why the government split it this way

India has both a Central and State government, and both need a share of tax. For sales inside a state, the two share it directly (CGST to Centre, SGST to State). For sales across states, one IGST keeps it simple, and the Centre later passes the state's share to wherever the goods are consumed.

Pro tips

• Decide intrastate vs interstate by the place of supply (usually the buyer's state), not where the goods were made.
• In Tally, once GST is set up correctly with the right states, it picks CGST/SGST or IGST automatically.
• The rate never changes with the split; only the labels do.

Common mistakes

• Charging IGST within the same state (or CGST/SGST across states). Always check the buyer's state first.
• Halving the total tax instead of the rate. You halve the rate (18% → 9% + 9%), which gives the same total.
• Confusing place of supply. For most goods it's where the buyer is, which decides the GST type.

Key takeaways

• Same state = CGST + SGST (rate split in half).
• Different state = one IGST at the full rate.
• The total tax is the same; only the split and destination differ.
• Place of supply (buyer's state) decides which applies.

Practice task

For a ₹15,000 sale at 18% GST, calculate the tax and invoice total for (a) a buyer in your state and (b) a buyer in another state. Write out the CGST, SGST or IGST lines for each.

Apply this in real Tally invoices in the ADFA program at HCI.