CGST vs SGST vs IGST: Simple Guide with Examples (2026)

GST in India is a dual tax - collected by both the Centre and the States. Which of CGST, SGST or IGST you charge depends entirely on where your goods or services are supplied. Get the head wrong and your buyer’s input tax credit can be blocked, so this 2026 guide breaks the rules down with simple, worked examples.

The three (well, four) GST components

• CGST - Central GST, collected by the central government
• SGST - State GST, collected by the state government
• UTGST - the SGST equivalent for Union Territories without a legislature (e.g. Chandigarh, Lakshadweep)
• IGST - Integrated GST, a single combined tax for inter-state supplies, imports and exports

CGST and SGST always travel together and always add up to the full GST rate. You never charge CGST + SGST and IGST on the same line - it is one or the other.

Intra-state sale - CGST + SGST

When the supplier and the place of supply are in the same state, the GST rate is split equally into CGST and SGST. An 18% sale becomes 9% CGST + 9% SGST. The buyer pays 18% in total; the split is purely an accounting matter between the Centre and that state.

Inter-state sale - IGST

When the supplier and the place of supply are in different states (or it is an import / export / SEZ supply), you charge a single IGST at the full rate - 18% IGST instead of 9% + 9%. IGST keeps the input-credit chain unbroken across state borders.

How the place of supply is decided

The place of supply is a legal concept, not simply the address you bill to. Broadly:

• Goods that move - the place of supply is where the goods are delivered (where movement ends)
• Goods that do not move - where they are located at the time of delivery
• Most services - the location of the registered recipient; for unregistered recipients, the address on record

The bill-to / ship-to trap

A buyer registered in Maharashtra may ask you to ship goods to their site in Gujarat. Under the bill-to / ship-to rule, the place of supply is generally the buyer’s registered (bill-to) state - so this is inter-state IGST even though the goods physically go to Gujarat. Reading only the shipping address here is a classic costly mistake.

A quick example

A seller in Tamil Nadu sells goods worth 50,000 rupees at 18% GST. To a buyer in Tamil Nadu: 4,500 CGST + 4,500 SGST. To a buyer in Karnataka: 9,000 IGST. The buyer pays 59,000 either way - only the tax heads change.

Why the right head matters for credit

Your customer offsets the exact tax you charged: IGST credit can be used against IGST, then CGST, then SGST. CGST credit cannot be used against SGST and vice-versa. Charge the wrong head and your customer ends up with credit they cannot fully use - you may then have to issue a credit note and re-invoice. Getting it right the first time avoids all of that.

Special cases worth knowing

• Exports and supplies to SEZ - treated as inter-state (IGST), usually zero-rated under LUT
• Imports - IGST is levied along with customs duty
• Union Territories without a legislature - CGST + UTGST instead of CGST + SGST