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GST & Tax
March 4, 20268 min read

CGST vs SGST vs IGST: A Simple Guide for Businesses

Understand the three types of GST in India — CGST, SGST, and IGST. Learn when each applies, how to calculate them, and how to invoice correctly for inter-state and intra-state sales.

If you run a business in India, understanding the Goods and Services Tax (GST) is non-negotiable. However, the division of GST into CGST, SGST, and IGST often confuses new business owners.

In this guide, we break down exactly what these three terms mean, when to apply them on your invoices, and how they affect your business.

The Basics: Why Three Types of GST?

India is a federal country, meaning power and responsibilities are shared between the Central Government and the State Governments. Before GST, taxes were a mess of state VATs, central excise duties, and service taxes.

GST unified these, but both the Central and State governments still need revenue. Therefore, GST is split depending on where the transaction takes place.

1. CGST (Central Goods and Services Tax)

CGST is the tax collected by the Central Government on an intra-state sale (when the buyer and seller are in the same state).

2. SGST (State Goods and Services Tax)

SGST is the tax collected by the State Government on an intra-state sale.

The Golden Rule for Intra-State Sales

When selling within the same state, CGST and SGST are always applied together. The total GST rate is split equally 50/50 between them. For example, if the GST rate is 18%, you charge 9% CGST + 9% SGST.

3. IGST (Integrated Goods and Services Tax)

IGST is collected by the Central Government for inter-state sales (when the buyer and seller are in different states). The Central Government later distributes the state's share to the destination state.

If the GST rate is 18%, you charge the full 18% as IGST.

Example Scenarios

Scenario A: Sale within the SAME state (Intra-State)

  • Seller: Tech Solutions (Maharashtra)
  • Buyer: Local Shop (Maharashtra)
  • Service: Web Design (Value: ₹10,000)
  • GST Rate: 18%

How to Invoice: Central Government gets ₹900 (9% CGST). Maharashtra Government gets ₹900 (9% SGST). Total invoice value: ₹11,800.

Scenario B: Sale to a DIFFERENT state (Inter-State)

  • Seller: Tech Solutions (Maharashtra)
  • Buyer: Startup Inc. (Karnataka)
  • Service: Web Design (Value: ₹10,000)
  • GST Rate: 18%

How to Invoice: Charge ₹1,800 as IGST (18%). Total invoice value: ₹11,800.

How to Automate This

Manually checking your state against the client's state and splitting the tax is prone to human error. If you get it wrong, your client can't claim Input Tax Credit (ITC), and you could face penalties.

Using a smart invoice generator like QuoteBaba solves this instantly. You enter your GSTIN and the client's address, and our system automatically applies either CGST/SGST or IGST based on the respective states.

Never Guess GST Again

Generate tax-ready estimations, quotes, and invoices with accurate GST breakdowns.

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