Every GST invoice must charge either CGST + SGST or IGST — never both. The choice depends on whether the supply is intra-state or inter-state. Here is a clear explanation with examples.
India's GST is not a single tax — it is split into three components based on where the supply happens. CGST (Central GST) goes to the central government. SGST (State GST) goes to the state government. IGST (Integrated GST) goes to the central government for inter-state supplies, which then settles it with the destination state. Understanding which one to charge on your invoices is fundamental to GST compliance.
The rule is simple: intra-state supply = CGST + SGST (split equally). Inter-state supply = IGST (single tax, same total rate). The total tax percentage is the same — only the split changes. If the GST rate on an item is 18%, an intra-state invoice shows 9% CGST + 9% SGST. An inter-state invoice shows 18% IGST.
Getting this wrong is one of the most common GST compliance errors. Wrong tax head means wrong payment to the wrong government, which creates demand notices, interest, and complicated refund processes. We built myBillPlease to handle this automatically — the system reads the state codes from your GSTIN and the customer's GSTIN, determines intra-state or inter-state, and applies the correct split. No manual calculation needed. Try our GST calculator to see both splits for any amount.
When to charge what and where the money goes
| Feature | CGST | SGST / UTGST | IGST |
|---|---|---|---|
| Full form | Central Goods and Services Tax | State / Union Territory GST | Integrated Goods and Services Tax |
| Governed by | CGST Act 2017 | SGST Act / UTGST Act | IGST Act 2017 |
| Applies to | Intra-state supplies | Intra-state supplies | Inter-state supplies + imports |
| Collected by | Central government | State government | Central government (settled with states) |
| Rate (if total GST = 18%) | 9% | 9% | 18% |
| On invoice | Shown with SGST | Shown with CGST | Shown alone |
| ITC utilisation | CGST → CGST, then IGST | SGST → SGST, then IGST | IGST → IGST, CGST, SGST (in order) |
| Place of Supply = Seller state? | Yes — intra-state | Yes — intra-state | No — inter-state |
| E-commerce B2C | If buyer in same state | If buyer in same state | If buyer in different state |
The determination is based on Place of Supply rules under the IGST Act. For goods, the Place of Supply is where the goods are delivered. For services, it is the location of the recipient.
Intra-state (CGST + SGST): When both the supplier location and the Place of Supply are in the same state. Example: You are in Mumbai (Maharashtra) and deliver goods to a customer in Pune (Maharashtra). Both in Maharashtra = intra-state = CGST + SGST.
Inter-state (IGST): When the supplier location and Place of Supply are in different states. Example: You are in Mumbai (Maharashtra) and deliver goods to a customer in Delhi. Different states = inter-state = IGST.
How to identify the state: The first two digits of the GSTIN are the state code. If your GSTIN starts with 27 (Maharashtra) and the customer's GSTIN starts with 07 (Delhi), it is inter-state. If both start with 27, it is intra-state. For B2C sales where the customer has no GSTIN, use the delivery address state.
In myBillPlease, you add customers with their GSTIN. The system extracts the state code and compares it with your business state. Every invoice automatically gets the correct CGST+SGST or IGST split. For e-commerce sellers, this is critical because customers are in different states for every order. Use the HSN code directory to find the correct rates for your products.
Real scenarios showing CGST+SGST vs IGST application
You run a shop in Delhi (state code 07). Customer walks in and buys goods worth Rs 10,000. GST rate: 18%. Invoice shows: CGST 9% = Rs 900, SGST 9% = Rs 900. Total: Rs 11,800.
You are in Karnataka (29). Shopify customer orders from Maharashtra (27). Goods shipped to Maharashtra. IGST 18% = Rs 1,800 on Rs 10,000. No CGST or SGST. Total: Rs 11,800.
You provide IT consulting from Bangalore (29) to a client also in Karnataka (29). Service fee: Rs 50,000. CGST 9% = Rs 4,500, SGST 9% = Rs 4,500. Total: Rs 59,000.
Same IT consulting from Bangalore (29) but client is in Mumbai (27). Service fee: Rs 50,000. IGST 18% = Rs 9,000. No CGST or SGST. Total: Rs 59,000. Same total, different tax head.
Export from India to USA. Exports are zero-rated under IGST Act. IGST rate = 0%. No CGST or SGST either. But you can claim ITC on inputs used for export and apply for refund.
Importing machinery from Germany. Imports attract IGST (not CGST+SGST) paid at customs. IGST 18% on assessable value + customs duty. This IGST is available as ITC in your GSTR-3B.
Input tax credit utilisation follows a specific order that you must understand to pay the correct amount under each head:
IGST credit must be used first against IGST liability. Any remaining IGST credit can be used against CGST liability, then SGST liability.
CGST credit must be used first against CGST liability. Any remaining CGST credit can be used against IGST liability. CGST credit CANNOT be used against SGST liability.
SGST credit must be used first against SGST liability. Any remaining SGST credit can be used against IGST liability. SGST credit CANNOT be used against CGST liability.
This order matters because cross-utilisation between CGST and SGST is not allowed. If you have excess CGST credit but a SGST liability, you cannot use the CGST credit for it — you must pay SGST in cash and carry forward the CGST credit. Read our complete ITC guide for more details on claiming and utilising credits correctly.
myBillPlease calculates the ITC utilisation order automatically in the GSTR-3B report. The system splits your input credits by tax head and applies them in the correct sequence. Download the report and you see exactly how much to pay under each head.
Error 1: Charging IGST on intra-state supply. If buyer and seller are in the same state, IGST is wrong. The tax goes to the central government instead of being split between central and state. This requires a reversal and re-payment under the correct heads. myBillPlease prevents this by auto-detecting the state from GSTIN.
Error 2: Charging CGST+SGST on inter-state supply. The reverse problem — SGST goes to your state government but should go to the buyer's state via IGST. Requires complicated corrections. Again, automated state detection eliminates this.
Error 3: Using CGST credit against SGST. Not allowed. Many businesses make this mistake when filing GSTR-3B manually. The portal rejects it but if you force-file with wrong utilisation, you create a demand.
Error 4: Wrong state code for e-commerce customers. For B2C e-commerce sales, the Place of Supply is the delivery state. If you ship to the wrong state (e.g., billing address vs delivery address), the IGST vs CGST+SGST determination is wrong.
Prevention: Use billing software that reads GSTIN state codes and delivery addresses to auto-determine the correct tax type. myBillPlease does this on every invoice — zero manual intervention.
myBillPlease reads GSTIN state codes and applies the correct tax split on every invoice. No manual calculation. Free plan available.
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