CGST & SGST vs IGST — Which Applies?
One of the most important concepts in GST is understanding whether to charge CGST+SGST (for intra-state transactions) or IGST (for inter-state transactions). BillYantra handles this automatically, but it is helpful to understand the rules.
The Core Rule
The tax type is determined by comparing the seller's state (your company's state in Settings) with the buyer's Place of Supply (the state entered on the customer/invoice).
| Scenario | Tax Applied | How It Works |
|---|---|---|
| Seller state equals buyer's Place of Supply | CGST + SGST | Each at GST Rate ÷ 2 |
| Seller state differs from buyer's Place of Supply | IGST | At the full GST Rate |
Intra-State Example (CGST + SGST)
You are a business registered in Maharashtra (State Code: 27). You raise an invoice for a customer also in Maharashtra.
- GST Rate on the service: 18%
- CGST: 9% (18 ÷ 2)
- SGST: 9% (18 ÷ 2)
- IGST: 0% (not applicable)
On a ₹10,000 invoice: CGST = ₹900, SGST = ₹900, Total = ₹11,800.
Inter-State Example (IGST)
Same Maharashtra business, but the customer is in Delhi (Place of Supply: Delhi).
- GST Rate: 18%
- CGST: 0% (not applicable)
- SGST: 0% (not applicable)
- IGST: 18%
On a ₹10,000 invoice: IGST = ₹1,800, Total = ₹11,800.
Note: The total tax amount is the same. What changes is how the tax is split between Central Government (CGST/IGST) and State Government (SGST).
Special Cases
Imports and Exports
- Exports: GST is zero-rated. You can claim a refund of input tax credit.
- Imports of services: IGST applies under the reverse charge mechanism.
Place of Supply for Services
For most services, the Place of Supply is the recipient's state (where the customer is located). For services involving physical locations (e.g., hotel stays, events), it is the location where the service is performed.
E-Commerce Sellers
If you sell through an e-commerce operator, the Place of Supply rules may differ. Consult your CA for specific guidance.
How BillYantra Handles This
When you select a customer and their Place of Supply, BillYantra:
- Compares your company's state (from Settings) with the customer's Place of Supply
- Automatically sets CGST+SGST or IGST on every line item
- Recalculates instantly when you change the Place of Supply
You never need to manually toggle between CGST+SGST and IGST — it is fully automatic.
Important: Always verify your company's state code is correctly set in Settings → Company Settings before creating invoices.
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