CGST + SGST or IGST: how to decide, every time

One question decides it — is the place of supply in the same state as you? If yes, charge CGST and SGST. If no, charge IGST. Worked examples, edge cases and the traps.

Compare two things: your location as the supplier, and the place of supply. If both are in the same state or union territory, charge CGST and SGST, each at half the total rate. If they are in different states, charge IGST at the full rate. Nothing else — not the buyer's address on your ledger, not where the payment came from — changes that answer.

Last reviewed: August 2026. Place-of-supply rules have several special cases; confirm anything unusual with your CA or on the GST portal.

What is the one rule I need to remember?

Same state, split the tax. Different state, one tax.

Situation	What you charge	On an 18% item
Supplier and place of supply in the same state	CGST + SGST	9% + 9%
Supplier and place of supply in the same union territory without its own legislature	CGST + UTGST	9% + 9%
Supplier and place of supply in different states or union territories	IGST	18%
Export, or supply to a unit in a special economic zone	Treated as inter-state, zero-rated with the prescribed documentation	IGST route
Import of goods	IGST is paid at customs	IGST

The buyer pays the same total either way. What changes is which government gets it, and which boxes it lands in on both your returns.

What exactly is "place of supply"?

It is the location the law assigns to a supply, and it is defined separately for goods and for services.

For goods that move, the place of supply is where the movement ends — the location where the goods are handed to the buyer. That is why a Mumbai wholesaler dispatching to a Pune retailer charges CGST and SGST, while the same wholesaler dispatching to Surat charges IGST.

For goods that do not move, it is the location of the goods at the time of delivery. For goods assembled or installed at site, it is the site.

For services, the default is the location of the recipient when they are registered. When the recipient is not registered, it is the address on your record, and if you have no address on record, your own location. Several services have their own rule — immovable property, restaurants, events, transport, training — where the place of supply follows where the work actually happens.

What if I ship to one address and bill another?

This is the bill-to / ship-to case, and it catches people out. When a registered buyer directs you to deliver the goods to someone else — a customer of theirs, or their own branch — the law treats the goods as having been received by the buyer who gave the direction. The place of supply is that buyer's principal place of business, not the delivery address.

Example. You are in Karnataka. A Delhi-registered trading company buys from you and asks you to deliver to their customer in Bengaluru. The place of supply is Delhi, so you charge IGST — even though the truck went across town. Put both addresses on the invoice: the delivery address and the place of supply. This is exactly the case the invoice rules ask you to disclose.

Does the buyer's GSTIN state settle it?

Nearly always for goods that move, because a registered buyer's delivery state and registration state usually match. But it is the place of supply that decides, not the GSTIN. Two cases where they diverge:

The bill-to / ship-to case above.
Where a buyer registered in one state takes delivery in another for a supply whose rule points at the delivery location.

The practical habit: read the state code in the GSTIN as a first check, then confirm against where the goods are actually going before you save the bill.

What happens if I charge the wrong one?

You have paid tax under the wrong heads, and your buyer's credit is under the wrong heads too. GST law provides for correcting a supply wrongly treated as intra-state when it was inter-state, and the other way round — but it is a correction with its own process, not a re-print of the bill.

The cost is rarely the tax. It is the time: your buyer's credit does not reconcile, they raise it with you at month end, and someone has to unpick which invoices are affected. Getting the state right at billing time is a two-second check that saves a two-day chase.

How does the split work on a worked bill?

Take a supply with a taxable value of ₹2,40,000 at 18%.

Intra-state, both parties in Maharashtra:

CGST at 9%: ₹21,600
SGST at 9%: ₹21,600
Invoice total: ₹2,83,200

Inter-state, supplier in Maharashtra and place of supply in Gujarat:

IGST at 18%: ₹43,200
Invoice total: ₹2,83,200

Same total, different heads. Note that CGST and SGST are always equal halves of the rate — there is no case where you charge 12% CGST and 6% SGST. If your bill shows an unequal split, something is wrong with the setup, not with the law.

What about union territories, exports and SEZ?

Union territories. Union territories without their own legislature use UTGST in place of SGST. The arithmetic is identical: CGST plus UTGST, half and half. Union territories that do have a legislature — Delhi, Puducherry, and Jammu and Kashmir — use SGST like a state.

Exports. An export is treated as an inter-state supply and is zero-rated. You can export under a bond or letter of undertaking without paying tax, or pay IGST and claim a refund. The documentation matters more than the arithmetic here, so set it up with your CA before the first consignment.

SEZ. A supply to a developer or unit in a special economic zone is also treated as inter-state and zero-rated, on the same two routes. A supply from an SEZ into the domestic area is treated as an import by the buyer.

Imports. IGST on imported goods is collected at customs along with the customs duty, not charged by an Indian supplier.

How do I stop my counter staff getting this wrong?

Make it a setting, not a decision. Three things do most of the work:

Store the state against the party, not in someone's head. Every customer record should carry a GSTIN and a state, entered once when the account is opened.
Let the bill choose the heads. If your billing system knows your state and the party's place of supply, the CGST/SGST versus IGST decision should never be typed by a person.
Flag the exceptions. Bill-to / ship-to and any supply where delivery and place of supply differ should force someone to look, because that is the one case a rule cannot infer.

If you want the same discipline applied to the rest of the invoice, our post on what a GST invoice must contain has the full field checklist.

FAQ

Is IGST more expensive than CGST plus SGST? No. The total is the same. An 18% item costs the buyer 18% either way — as 9% plus 9%, or as a single 18%. Only the split between the central and state governments changes, and which columns the amounts appear in on your return.

Which state do I use when the customer walks into my shop? Your own. A counter sale where the customer takes the goods away is intra-state, because the place of supply is where the goods are handed over. Charge CGST and SGST, even if the customer is from another state or shows you an out-of-state GSTIN.

We have branches in two states. Is a stock transfer between them taxable? A transfer between two separately registered units of the same business is a supply under GST, and because they are in different states it attracts IGST. The receiving branch takes the credit. Move the goods on the correct document and keep the two registrations' records clean.

Can one invoice have both IGST and CGST with SGST lines? No. A single invoice has a single place of supply, so it carries one treatment for every line. If you are supplying to two different places, raise two invoices.

If you would rather the bill picked the right tax heads by itself, see what KillStock handles today and the plans.