Difference Between CGST, SGST, and IGST
Every GST invoice shows tax, but not every invoice shows the same type of tax. Some show CGST and SGST, and some show IGST. Choosing the wrong one is one of the most common billing errors, and it can create problems for you and for your buyer.
This guide explains the difference between CGST, SGST and IGST in plain language. You will learn when each applies and see worked examples with numbers. Then you will follow numbered screenshots in Vinimay to check the details that decide the tax type before you send a document to your customer. Ten FAQs at the end answer the usual doubts.
Getting the tax type right is easier when your billing software is built for GST. Vinimay is free GST billing and accounting software built for small businesses, and its GST Invoices support CGST, SGST and IGST, so you can focus on the sale and not on the arithmetic.
What Are CGST, SGST and IGST?
CGST (Central GST): the part of GST on a sale within one state that goes to the Central Government.
SGST (State GST): the part of GST on a sale within one state that goes to the State Government.
IGST (Integrated GST): the GST charged on a sale from one state to another. It is collected by the Central Government and shared with the state where the goods or services are consumed.
In union territories without a legislature, such as Chandigarh and Ladakh, UTGST applies in place of SGST.
When Does Each Tax Apply?
It depends on the location of the supplier and the place of supply.
Supplier and place of supply in the same state: charge CGST + SGST, in equal halves.
Supplier and place of supply in different states: charge IGST.
The IGST rate is the sum of the CGST and SGST rates. So an 18% GST rate means 9% CGST + 9% SGST, or 18% IGST.
CGST vs SGST vs IGST: Quick Comparison
Simple Examples
Example 1: Sale within the same state. A seller in Maharashtra sells goods worth ₹10,000 to a buyer in Maharashtra. GST rate is 18%. CGST at 9% is ₹900 and SGST at 9% is ₹900. The invoice total is ₹11,800.
Example 2: Sale to another state. A seller in Madhya Pradesh sells goods worth ₹10,000 to a buyer in Gujarat. GST rate is 18%. IGST at 18% is ₹1,800. The invoice total is ₹11,800.
In both examples the total is the same. Only the split of the tax is different.
How to Check the Details That Decide the Tax Type in Vinimay
The tax type depends on three things: your business location, your customer's location and the item you sell. Vinimay's document form asks for each of these, so check them before you create the document.
Step 1: Open the document form from the Dashboard
After you log in, you land on the Dashboard. In the Quick Actions box at the top right, click Proforma Invoice (image 1).
Image 1:
Alt: Vinimay Dashboard with the Proforma Invoice button in Quick Actions
Caption: Proforma Invoice button on the Dashboard
Step 2: Check the company, customer and address
The Create Proforma Invoice window opens. Check the Company (image 2). This is your business, so it tells you which state the supply starts from. Type the customer name (image 3). Then look at the Shipping Address (image 4). By default, Same as billing address is ticked. The customer's state and the place of supply decide whether CGST + SGST or IGST applies, so make sure the address is correct.
Image 2:
Alt: Vinimay Create Proforma Invoice window with company, customer name and shipping address
Caption: Company, customer name, and shipping address
Step 3: Check the price and HSN code of each item
Scroll down to Items. Enter the Price/Unit (image 5) of the item. Check the HSN Code field (image 6). The HSN code decides the GST rate of the item, and the rate is what gets split into CGST and SGST, or charged as IGST.
Image 3:
Alt: Vinimay proforma invoice item row with price per unit, amount and HSN code
Caption: Price/Unit and HSN Code in the item row
Step 4: Check the totals and create the document
Scroll to the bottom. Check the Subtotal and Invoice Total (image 7). Before you send the document, confirm that the total matches what you expect after tax. Then click Create Proforma Invoice (image 8).
Image 4:
Alt: Vinimay proforma invoice subtotal, invoice total and Create Proforma Invoice button
Caption: Subtotal, Invoice Total and the Create Proforma Invoice button
Common Mistakes to Avoid
Charging CGST and SGST on a sale to another state.
Charging IGST on a sale within the same state.
Using the buyer's billing address instead of the place of supply.
Splitting the tax unequally between CGST and SGST.
Not checking that the invoice total equals taxable value plus tax.
Tips for Getting the Tax Type Right
Always confirm the place of supply before choosing the tax type.
Remember: IGST = CGST + SGST.
Check the GST rate and HSN code of each item before billing.
Keep your customers' addresses up to date.
Ask your CA about special cases such as services, imports and exports.
Conclusion
CGST and SGST apply together within a state, and IGST applies between states. Check the place of supply, the customer's address and the HSN code every time, and make sure the total adds up. Do this and your invoices will stay correct.
Try Vinimay free and create GST invoices with the right tax split.
FAQs
Q1. What is the main difference between CGST, SGST and IGST?
CGST and SGST are charged together on a sale within one state. IGST is charged on a sale between states.
Q2. Who receives CGST and SGST?
CGST goes to the Central Government, and SGST goes to the State Government.
Q3. Who receives IGST?
IGST is collected by the Central Government and shared with the state where the goods or services are consumed.
Q4. How do I know whether to charge IGST or CGST + SGST?
Compare the supplier's state with the place of supply. If they are the same, charge CGST + SGST. If they differ, charge IGST.
Q5. Is the CGST rate always equal to the SGST rate?
Yes, on the same supply they are charged in equal halves of the GST rate.
Q6. If GST is 18%, what are CGST and SGST?
9% CGST and 9% SGST. For a sale to another state, it is 18% IGST.
Q7. What is UTGST?
It is the tax that applies in place of SGST in union territories without a legislature.
Q8. Can I charge both IGST and CGST on one invoice?
No. A supply is either within a state (CGST + SGST) or between states (IGST).
Q9. Does the tax type change the total price?
Not at the same GST rate. The total is the same, but the split between the taxes is different.
Q10. Does Vinimay support CGST, SGST and IGST?
Yes. Vinimay's GST Invoices support CGST, SGST and IGST.
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