GST and invoicing
CGST, SGST and IGST: meaning, difference and examples
Definition
CGST, SGST and IGST: CGST and SGST are the central and state halves of GST on a sale within one state; IGST is the single tax charged on a sale between states.
Also called: CGST, SGST, IGST, UTGST, CGST and SGST, Central GST and state GST
What CGST, SGST and IGST mean
India's GST has a central part and a state part. On a sale within one state, an intra-state sale, the seller charges CGST (central GST) and SGST (state GST) in two equal halves. In Union territories without their own legislature, such as Chandigarh and Ladakh, UTGST takes the place of SGST.
On a sale between two states, an inter-state sale, the seller charges IGST (integrated GST) at the full rate. The Centre collects it and passes the state's share to the state where the goods or services are consumed. The total tax is the same either way: at 18%, an intra-state sale carries 9% CGST plus 9% SGST, and an inter-state sale carries 18% IGST.
How to tell which GST applies
Compare your location with the place of supply. If both are in the same state, charge CGST and SGST. If they are in different states, charge IGST. The first two digits of a GSTIN tell you the state where a business is registered, but for goods the place of supply is where delivery ends, which is usually, but not always, the buyer's GSTIN state.
Input tax credit, and common mistakes
The three taxes sit in separate ledgers when you claim input tax credit. Under section 49 of the CGST Act, IGST credit is used first against IGST and then against CGST and SGST. CGST credit can pay CGST or IGST, and SGST credit can pay SGST or IGST, but CGST credit can never pay SGST, and SGST credit can never pay CGST.
- Charging CGST and SGST on an inter-state sale. You then pay IGST and claim a refund of the wrong tax under section 77; it is not simply moved across.
- Splitting the rate wrongly: 18% is 9% plus 9%, not 18% plus 18%.
- Rounding each half separately so that CGST plus SGST does not equal the total tax on the invoice.
Worked example
The same ₹50,000 order, two ways
An Indore manufacturer (Madhya Pradesh, GSTIN starting 23) sells goods worth ₹50,000 at 18% to two customers. To a dealer in Bhopal, the same state: CGST at 9%, ₹4,500, plus SGST at 9%, ₹4,500, for a total of ₹59,000. To a dealer in Nagpur, Maharashtra: IGST at 18%, ₹9,000, again a total of ₹59,000. The Bhopal dealer claims ₹4,500 of CGST credit and ₹4,500 of SGST credit; the Nagpur dealer claims ₹9,000 of IGST credit.
In managemate
managemate picks the split for you. If the ship-to state on the order, or without a shipping address the state in the customer's GSTIN, matches the state in your GSTIN, the invoice shows CGST and SGST at half the rate each; otherwise it shows IGST. The invoice's GST summary lists the taxable value and tax for each rate, showing 18% as 9% + 9% on intra-state sales, and the second half takes any odd paisa so CGST and SGST always add up to the total tax. Reports show GST collected on sales, GST paid on purchases and the difference for any period. managemate labels the state half SGST even in Union territories that use UTGST, and it does not keep GST credit ledgers or file returns.
Where this shows up in managemate
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