Check before you rely on this. This explains how GST works in general terms and is not tax advice. Rates, turnover thresholds and filing requirements change, and they differ by the kind of business you run — confirm the current position on the GST portal or with your accountant before acting on it.
GST is one tax collected under three headings. Which heading applies is not a judgement call — it follows from where the supply happens. Once that clicks, the rest is arithmetic.
The three heads
- CGST — Central GST. Goes to the central government.
- SGST — State GST. Goes to the state where the supply happens. (In union territories this is UTGST, which behaves the same way.)
- IGST — Integrated GST. Collected centrally on interstate supplies and then apportioned.
The rule
Compare your place of supply with the buyer's location:
| Situation | What applies |
|---|---|
| Both in the same state | CGST + SGST, each half the rate |
| Different states | IGST, the full rate |
| Export | Zero-rated, subject to conditions |
That is the whole decision.
The customer pays the same either way
This trips people up, so it is worth being explicit. On a 1,000 sale at 18%:
| Same state | Different state | |
|---|---|---|
| Taxable value | 1,000.00 | 1,000.00 |
| CGST 9% | 90.00 | — |
| SGST 9% | 90.00 | — |
| IGST 18% | — | 180.00 |
| Total | 1,180.00 | 1,180.00 |
The buyer is indifferent. The split matters to the tax authorities, and to your own credit position — not to the price.
Where "place of supply" is not obvious
For goods handed over a counter, place of supply is where the goods are. For most other cases there are specific rules, and the ones that catch people out include:
- Goods shipped to a different address than the billing address. These can diverge, and the rules say which one governs.
- Services delivered remotely. Where the recipient is registered usually matters more than where you sat while working.
- Bill-to / ship-to arrangements, where you invoice one party and deliver to another.
- Services connected to immovable property, which follow the property's location rather than either party's.
If your business regularly hits any of these, it is worth getting the treatment confirmed once by an accountant and then configuring it, rather than deciding invoice by invoice.
Common mistakes
- Charging CGST+SGST on an interstate sale. Your buyer cannot use it correctly, and you have paid the wrong authority.
- Using the billing address when the shipping address governs.
- Halving the rate wrongly. CGST and SGST are each half — 9% and 9% for an 18% rate, not 18% twice.
- Leaving place of supply unset so the software guesses.
Make it automatic
Every input to this rule is data you already hold: your registered state, and the buyer's. Software that stores both can decide the split on every invoice without asking — which removes the entire category of mistake above.
Let the software decide the split from the buyer's state. Try eBillSoftwares free for two months — every module, no card.