CGST vs SGST vs IGST — Key Differences Explained Simply | InvoiceGPT

The Three Components of GST

India's GST system has three components: CGST (Central GST), SGST (State GST), and IGST (Integrated GST). Which you charge depends entirely on whether the buyer and seller are in the same state (intra-state) or different states (inter-state).

CGST and SGST — For Intra-State Transactions

When you sell to a buyer within the same state, GST is split 50/50 between the Central and State governments. For example, on 18% GST goods: CGST = 9% goes to the Centre, SGST = 9% goes to the State. This is what most small shopkeepers charge for local sales.

IGST — For Inter-State Transactions

When you sell to a buyer in a different state, you charge IGST (Integrated GST) at the full combined rate. For 18% GST goods, you charge 18% IGST (no split). The IGST then gets distributed between the Centre and the destination state.

How to Determine Which Tax to Apply

Check the 'Place of Supply' — typically the location where goods are delivered or services are consumed. If Place of Supply = your state, charge CGST + SGST. If Place of Supply = another state, charge IGST.

Frequently Asked Questions

Does InvoiceGPT automatically choose between CGST+SGST and IGST?

InvoiceGPT currently handles intra-state (CGST + SGST) billing — ideal for most local shopkeepers and businesses. For interstate IGST transactions, you can note the IGST amount in the invoice description.

Can I claim input credit for IGST paid?

Yes. IGST paid on purchases can be used to offset IGST, CGST, or SGST liability in sequence as per GST rules.

My supplier is in another state — do I pay IGST?

Yes. Your supplier charges you IGST for interstate supply. You can claim this as input tax credit against your output IGST, CGST, or SGST.

CGST vs SGST vs IGST — Key Differences Explained Simply