If a sale happens inside your own state, you charge CGST + SGST (half the rate each). If it goes to another state, you charge a single IGST at the full rate. That one rule — decided by the buyer’s place of supply — is the whole difference between CGST, SGST and IGST. This guide explains each tax in plain English, shows a worked small-shop example, and clears up the mistakes shopkeepers make most often.
What CGST, SGST and IGST actually mean
GST on a sale is never a single mystery tax. It is split so that both the Central and State governments get their share. The three names you see on a bill are:
| Tax | Full form | When it applies | Who collects it |
|---|---|---|---|
| CGST | Central GST | Sale within your state (intra-state) | Central Government |
| SGST | State GST | Sale within your state (intra-state) | Your State Government |
| IGST | Integrated GST | Sale to another state (inter-state) | Centre, then shared with the buyer’s state |
The key idea: CGST and SGST always travel together. You never charge CGST on its own. On a same-state sale you charge both, and each is exactly half the total GST rate. On a different-state sale you drop both and charge IGST at the full rate instead.
(In a union territory such as Chandigarh or Lakshadweep, SGST is replaced by UTGST — Union Territory GST. The maths is identical; only the label changes.)
The one rule: place of supply decides everything
The tax you charge depends on where the sale is supplied, not on where the customer happens to be standing at your counter. Compare two things:
- Your shop’s state (from your GSTIN — the first two digits are your state code;
33is Tamil Nadu,29is Karnataka,27is Maharashtra). - The buyer’s place of supply (usually the buyer’s state).
Then:
- Same state → intra-state sale → CGST + SGST.
- Different state → inter-state sale → IGST.
For an ordinary walk-in customer who has no GSTIN, the place of supply is normally the location of your shop — so most over-the-counter kirana and retail sales are intra-state CGST + SGST. You mainly meet IGST when you sell to a customer or business in another state, or ship goods outside your state.
A worked example: same shop, two customers
Meena runs an electronics and stationery shop in Madurai, Tamil Nadu (state code 33).
She sells a printer priced at ₹5,000, taxed at 18%.
Customer A is in Madurai (same state — intra-state):
- 18% splits into CGST 9% = ₹450 and SGST 9% = ₹450.
- Invoice total = ₹5,000 + ₹450 + ₹450 = ₹5,900.
Customer B is in Kochi, Kerala (state code 32 — different state, inter-state):
- Single IGST 18% = ₹900.
- Invoice total = ₹5,000 + ₹900 = ₹5,900.
Notice the customer pays ₹5,900 either way. The total tax is the same 18%; only the split and the labels change. Get the split wrong, though — for example charging IGST on a local sale — and your GST return will not reconcile, and a registered buyer can lose their input tax credit.
A quick second example at a different rate
The same logic works at every rate. Say Meena also sells a ₹1,000 packet of an item taxed at 5%:
- Within Tamil Nadu: CGST 2.5% = ₹25 + SGST 2.5% = ₹25 → total ₹1,050.
- To Kerala: IGST 5% = ₹50 → total ₹1,050.
Half-and-half within the state, one full IGST line across states — that pattern never changes, whatever the rate. (GST rates themselves were revised under the 2025 reform to mainly 0%, 5%, 18% and 40% slabs — always confirm the current rate for your goods on cbic.gov.in or with your CA before billing.)
Common mistakes to avoid
- Charging only CGST, or only SGST. On an intra-state sale it is always both, half each. One without the other is wrong.
- Using IGST for a local sale (or CGST+SGST for an out-of-state sale). The place of supply — not convenience — decides. Mixing these up is the top reconciliation headache at return-filing time.
- Splitting the rate wrongly. CGST and SGST are each half the rate, not the full rate twice. 18% is 9% + 9%, never 18% + 18%.
- Forgetting the place of supply on the bill. It is a mandatory field on a GST tax invoice and it is what justifies the split you used.
For the full list of fields a compliant bill needs, see our guide to the GST invoice format for small shops.
Let the software do the split for you
You can work out CGST vs SGST vs IGST by hand on every sale — but across dozens of items and tax rates, at a busy counter, that is exactly where small shops lose time and make mistakes.
Yojika is offline-first GST billing software built for Indian small shops. Its tax engine reads the place of supply and applies the correct CGST + SGST or IGST automatically on every invoice, at the right rate, and prints to A4, A5 or a thermal receipt printer — in your choice of 22 official Indian languages. Your business data stays on your own PC, not in someone’s cloud.
- See what’s included on the features page.
- Check simple, transparent pricing on the pricing page.
- Or download Yojika and try it free for 14 days.
This article is general information, not tax advice. GST rules and rates change — confirm the current position on gst.gov.in or with your CA.