CGST, SGST and IGST: which tax goes on which invoice

The short answer

GST on a sale is charged in one of two ways:

• CGST + SGST when the supplier and the place of supply are in the same state. The rate is split in half: one half goes to the centre (CGST), the other to the state (SGST).
• IGST when they are in different states. The full rate is charged as one tax.

The total tax is the same either way. Only the split changes.

Supplies within a Union Territory that has no legislature carry CGST and UTGST instead of SGST. The idea is the same.

A worked example

A manufacturer in Tamil Nadu sells parts worth ₹9,000. The GST rate on the item is 18%.

What "place of supply" means

For goods, the place of supply is normally where the movement of the goods ends, which is the delivery location. That is usually the buyer's state, but not always.

If a customer registered in Maharashtra asks you to deliver to their plant in Tamil Nadu, the "bill to" and "ship to" differ. These cases have their own rules, so check with your accountant before you set the tax on a bill-to / ship-to order.

What goes on the invoice

A GST tax invoice shows, among other things:

• The supplier's and the recipient's GSTIN
• The place of supply, with the state name and code
• The HSN code, taxable value and rate for each line
• The CGST and SGST amounts, or the IGST amount, shown separately

The first two digits of a GSTIN are the state code. Tamil Nadu is 33, Karnataka 29, Maharashtra 27. Comparing the two state codes is a quick check on whether an invoice should carry IGST.

Input tax credit

Tax you pay on purchases can be set off against tax you collect on sales, in a fixed order: IGST credit is used first and can be set against any of the three taxes; CGST credit is set against CGST and then IGST; SGST credit is set against SGST and then IGST. CGST credit cannot be used to pay SGST, and the reverse is also true. This is why charging the wrong type of tax matters even though the total is the same: your customer's credit lands in the wrong place.

How an ERP handles it

In ARUKZ ERP each product carries one GST rate. When you raise a quotation, order or invoice, the system compares the customer's state with yours and applies CGST and SGST or IGST by itself. The same happens on purchases. See GST invoicing in ARUKZ ERP.

This page is a general explanation, not tax advice. GST rules and rates change; confirm the current position with your accountant or on the GST portal.