GST looks like one tax, but behind the scenes it divides into Central GST, State GST, Integrated GST or Union Territory GST, depending on the location of the supplier and the place of supply. This split reflects India's federal structure and ensures revenue goes to the right government.
The four GST components
| Component | Full form | When it applies |
|---|---|---|
| CGST | Central Goods and Services Tax | Intra-state supply (buyer and seller in the same state). Goes to the central government. |
| SGST | State Goods and Services Tax | Intra-state supply (buyer and seller in the same state). Goes to the state government. |
| IGST | Integrated Goods and Services Tax | Inter-state supply (buyer and seller in different states), imports, or supply to/from SEZs. Collected by the Centre, then apportioned. |
| UTGST | Union Territory Goods and Services Tax | Intra-UT supply. Mirrors SGST, but for Union Territories without a legislature. Goes to the UT administration. |
Intra-state supply: CGST + SGST (or UTGST)
When you sell goods or services to a buyer in the same state, you charge GST as CGST + SGST (or CGST + UTGST if you are in a UT). The total rate remains unchanged, but it splits equally. For example, an 18% GST transaction within a state is levied as:
- 9% CGST (to the Centre)
- 9% SGST (to the State)
So if the invoice value before tax is ₹10,000, the tax is ₹900 CGST + ₹900 SGST = ₹1,800 total.
Inter-state supply: IGST
When buyer and seller are in different states, the entire GST is levied as IGST. Using the same 18% rate:
- 18% IGST (collected by the Centre, then shared with the destination state during settlement)
So a ₹10,000 invoice becomes ₹10,000 + ₹1,800 IGST = ₹11,800.
A worked example: tax split on a sale
Scenario: A wholesaler in Maharashtra sells goods worth ₹50,000 (before tax) at 12% GST.
Case 1: Buyer also in Maharashtra (intra-state)
- Taxable value: ₹50,000
- CGST @ 6%: ₹3,000
- SGST @ 6%: ₹3,000
- Invoice total: ₹56,000
The ₹3,000 CGST goes to the central government; the ₹3,000 SGST goes to Maharashtra.
Case 2: Buyer in Karnataka (inter-state)
- Taxable value: ₹50,000
- IGST @ 12%: ₹6,000
- Invoice total: ₹56,000
The entire ₹6,000 IGST is collected by the Centre. During settlement, the Centre transfers SGST's share (₹3,000) to Karnataka, the destination state, and keeps the CGST portion.
The buyer always pays the same total GST, whether intra-state or inter-state. The split only affects which government receives which portion — the economic burden is identical.
Why the distinction matters
For the taxpayer, the split changes how input tax credit is claimed and adjusted. CGST credit can only be set off against CGST or IGST liability, SGST credit against SGST or IGST, and IGST credit can be set off against any. Understanding this flow prevents mismatches in returns.
Key takeaways
- Intra-state supply → CGST + SGST (or UTGST) split equally.
- Inter-state supply → IGST, later apportioned between Centre and destination state.
- Total GST rate stays the same; the split is only about who collects and who receives revenue.
- Knowing the buyer's location determines whether you charge CGST+SGST or IGST on the invoice.
Official sources
This explainer is based on official and primary sources. Always confirm figures and dates on these before acting:
Reviewed: October 2026. Tax rules change — verify the current financial year and assessment year before you rely on any figure.
This is general educational information for Indian taxpayers, not personalised tax, legal or financial advice. Union of Taxpayers is an independent platform and not a government body. Consider a qualified professional for your specific situation.
Not professional advice
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