The abbreviations look complicated, but the basic idea is simple: the tax shown on an invoice changes according to whether a supply is within one state or crosses state boundaries. The total tax rate stays the same either way; what changes is how it is split and labelled.
The three GST components
CGST (Central Goods and Services Tax) is the central share of the tax on an intra-state supply, collected by the Central Government. SGST (State Goods and Services Tax) is the state share, charged alongside CGST on the same intra-state supply. UTGST (Union Territory Goods and Services Tax) plays the SGST role in Union Territories without a legislature. IGST (Integrated Goods and Services Tax) is charged instead of the CGST + SGST pair on an inter-state supply and on imports, and is collected by the Centre.
Within the same state: CGST + SGST
When the supplier's location and the place of supply are in the same state, the supply is generally intra-state. The GST rate is split equally between CGST and SGST. In a Union Territory without a legislature, UTGST applies instead of SGST.
Example: a Maharashtra supplier makes a qualifying intra-state supply with a taxable value of ₹20,000 at 18%. The invoice shows ₹1,800 CGST and ₹1,800 SGST, for a total of ₹23,600.
Across state boundaries: IGST
When the supplier's location and the place of supply are in different states or Union Territories, the supply is generally inter-state. The full GST amount appears as IGST.
Example: if the same ₹20,000 supply is inter-state at 18%, the invoice shows ₹3,600 IGST. The overall tax is still 18%; only its presentation changes.
How each rate splits
The table shows the split under the rate structure in force since 22 September 2025. Rates can change and some supplies have special rates, so confirm the current rate for your goods or service before invoicing.
| Total GST rate | Intra-state: CGST | Intra-state: SGST / UTGST | Inter-state: IGST |
|---|---|---|---|
| 5% | 2.5% | 2.5% | 5% |
| 18% | 9% | 9% | 18% |
| 40% | 20% | 20% | 40% |
GST vs IGST: not two different taxes
A common confusion is treating GST and IGST as separate taxes. GST is the name of the whole system; CGST, SGST/UTGST and IGST are the heads under which that one tax is collected. A supply is taxed once, at one rate — the heads only decide how the amount is shared between the Centre and the destination state. You never charge IGST on top of CGST and SGST for the same supply.
Special cases treated as inter-state
Some supplies attract IGST even when they look local. Supplies to or by a Special Economic Zone (SEZ) unit or developer are treated as inter-state supplies, even if the SEZ sits in your own state — and supplies to an SEZ unit or developer are zero-rated, like exports. Exports of goods and services are also treated as inter-state and are zero-rated: you can export under a Letter of Undertaking (LUT) without paying IGST, or pay IGST and claim a refund. Imports attract IGST as well. Each of these routes has its own conditions and paperwork, so confirm the treatment with your CA before the first such invoice.
How input tax credit moves between the three heads
Input tax credit (ITC) does not move freely between heads. The broad rules: IGST credit is used first, against IGST liability and then against CGST or SGST. CGST credit is used against CGST and then IGST. SGST credit is used against SGST and then IGST. CGST credit can never pay an SGST liability, and SGST credit can never pay a CGST liability.
| Credit of | Can be used against | Cannot be used against |
|---|---|---|
| IGST | IGST, then CGST / SGST | — |
| CGST | CGST, then IGST | SGST |
| SGST / UTGST | SGST, then IGST | CGST |
The exact order of utilisation is prescribed (Sections 49, 49A and 49B of the CGST Act with Rule 88A), including a further detail: SGST credit is set off against IGST only after CGST credit has been fully used. The order matters when credits are tight — and getting the head wrong on a sale costs real cash flow: you pay again under the correct head and wait for the refund of the wrong one, while your customer's input credit sits under a head they may not be able to use. Two more reasons to get the intra-state vs inter-state question right on every invoice.
Charged the wrong head? There is a correction route
If you catch the mistake before anything is filed, the simple fix is usually a credit note against the wrong invoice and a fresh, correctly charged invoice. For tax already paid under the wrong head, the law provides a route: pay the tax under the correct head and claim a refund of the tax paid under the wrong head. Section 77 of the CGST Act and Section 19 of the IGST Act cover these situations, and in this specific case interest is not payable on the corrected payment. The refund claim has conditions and a time limit (generally two years from paying under the correct head), so take this to your CA rather than netting it off yourself.
Why place of supply matters
GST is destination-based: the place-of-supply rules decide which state receives the tax, and therefore which heads appear on your invoice. For many ordinary business-to-business services, the place of supply is the registered recipient's location — which is why a Pune agency billing a Delhi-registered client charges IGST. Services connected to immovable property, events, transport, telecom and online delivery have their own rules, and supplies to consumers can differ again. When the answer is not obvious, confirm it before issuing the invoice.
A quick decision path
- Identify the GST-registered location making the supply.
- Determine the place of supply under the relevant GST rule.
- Check the special cases: SEZ, export or import means IGST treatment.
- If supplier location and place of supply are in the same state, usually apply CGST plus SGST/UTGST.
- If they are in different states or Union Territories, usually apply IGST.
- Show the place of supply and state on an inter-state invoice.
Official references
Once you have confirmed the applicable rate and place of supply, use the GST calculator to check the split or work backwards from a tax-inclusive amount.
See the CBIC GST FAQs, the CBIC GST overview and Circular 90/09/2019-GST on place-of-supply details in inter-state invoices.
Frequently asked questions
What is the difference between CGST, SGST and IGST?
CGST is the central component and SGST is the state component, charged together on intra-state supplies. IGST is charged on inter-state supplies. The supplier's location and the place-of-supply rules determine the treatment; UTGST applies instead of SGST in Union Territories without a legislature.
What is the difference between GST and IGST?
GST means Goods and Services Tax, the overall tax system. IGST means Integrated Goods and Services Tax, one component of that system, used for inter-state supplies and imports. It is not an additional tax charged on top of CGST and SGST for the same supply.
Can CGST credit be used to pay SGST?
No. CGST credit cannot be set off against SGST liability, and SGST credit cannot be set off against CGST liability. Both can be used against IGST liability, subject to the prescribed order of utilisation. Confirm your working with your CA before filing.
What happens if I charge CGST and SGST instead of IGST by mistake?
Pay the tax under the correct head and claim a refund of the tax paid under the wrong head. Section 77 of the CGST Act and Section 19 of the IGST Act cover this situation. The refund has conditions and time limits, so work through it with your CA.
Which Union Territories use UTGST instead of SGST?
UTGST applies in Union Territories without their own legislature: the Andaman and Nicobar Islands, Lakshadweep, Dadra and Nagar Haveli and Daman and Diu, Chandigarh, and Ladakh. Delhi, Puducherry and Jammu and Kashmir have legislatures, so SGST applies there.