CGST vs SGST vs IGST: What is the Difference and Which to Charge?

Three GST types. One invoice. Which one do you charge?

When you first get GST-registered and start raising invoices, the CGST, SGST, and IGST question stops you cold.

You know the rate is 18%. But the invoice form is asking you to split it. Is it CGST + SGST? Or IGST? And what even is the difference?

This is one of the most common points of confusion for new GST-registered freelancers and small business owners in India. Getting it wrong is not just a formatting issue. It affects whether your client can claim Input Tax Credit correctly, and it can cause compliance problems in your GST returns.

The good news is that the rule is simple once you understand the logic behind it. After reading this guide, you will never be confused about which GST type to charge again.

Why does India have three types of GST?

When GST replaced the old indirect tax system in 2017, it unified dozens of different taxes into one. But India is a federal country, which means tax revenue is shared between the central government and state governments.

The three-way split exists to manage this revenue sharing:

CGST (Central GST) goes to the central government.

SGST (State GST) goes to the state government of the seller's state.

IGST (Integrated GST) goes to the central government first, and then the appropriate portion is transferred to the destination state.

The total tax rate stays the same regardless of which type applies. What changes is where the money goes. This matters for government accounting, but for you as a business owner, it affects which lines you show on your invoice.

The one rule that determines everything

If you and your client are in the same state: charge CGST + SGST.

If you and your client are in different states: charge IGST.

That is the entire rule. One question, two possible answers.

The technical term for this is the place of supply. When the place of supply and your place of business are in the same state, it is an intra-state supply and you charge CGST + SGST. When they are in different states, it is an inter-state supply and you charge IGST.

How the rates work

The total GST rate is the same whether you charge CGST + SGST or IGST. What changes is how that rate is split.

For the 18% slab (which applies to most services):

Intra-state (same state): CGST at 9% + SGST at 9% = 18% total

Inter-state (different state): IGST at 18% = 18% total

For the 12% slab: CGST at 6% + SGST at 6% = 12%, or IGST at 12%

For the 5% slab: CGST at 2.5% + SGST at 2.5% = 5%, or IGST at 5%

The split is always 50-50 between CGST and SGST for intra-state supplies. IGST is always the full rate as a single line.

Practical examples

Example 1: Freelance designer in Mumbai, client in Pune

Both Mumbai and Pune are in Maharashtra. This is an intra-state supply.

Charge: CGST 9% + SGST 9% = 18% total

On a Rs. 50,000 invoice:

• CGST: Rs. 4,500
• SGST: Rs. 4,500
• Total: Rs. 59,000

Example 2: Freelance developer in Bangalore, client in Delhi

Bangalore is in Karnataka. Delhi is a separate union territory. This is an inter-state supply.

Charge: IGST 18%

On a Rs. 50,000 invoice:

• IGST: Rs. 9,000
• Total: Rs. 59,000

Example 3: Content writer in Chennai, client in Hyderabad

Chennai is in Tamil Nadu. Hyderabad is in Telangana. Different states, inter-state supply.

Charge: IGST 18%

The total tax amount is identical to Example 1. Only the type changes.

What determines the place of supply for services?

For most services in India, the place of supply is the location of the recipient (your client).

If your client is GST-registered: The place of supply is the state shown on their GST registration.

If your client is not GST-registered (individual or unregistered business): The place of supply is usually the location where the service is performed or delivered.

For online services delivered remotely, which is the situation for most freelancers, the place of supply for a registered client is their GSTIN state. For an unregistered client, it is typically their address.

In practice: look at where your client is located. If they are in your state, charge CGST + SGST. If they are in a different state, charge IGST.

What about Union Territories?

India has Union Territories (UTs) in addition to states. The GST treatment is slightly different:

Union Territories with legislature (Delhi, Puducherry, Jammu and Kashmir): These collect SGST like regular states. Supplies within these UTs are intra-state.

Union Territories without legislature (Chandigarh, Dadra and Nagar Haveli, Daman and Diu, Lakshadweep, Andaman and Nicobar Islands): These collect UTGST (Union Territory GST) instead of SGST. The rate is the same as SGST.

For practical purposes: if you are supplying within a UT without a legislature, you charge CGST + UTGST instead of CGST + SGST. The rates are identical. On most invoice generators, SGST and UTGST are treated the same way.

What about exports?

If you provide services to a client outside India, the supply is treated as an export of services and is zero-rated under GST.

Zero-rated means the GST rate is 0%. You do not charge CGST, SGST, or IGST on an export invoice.

On your invoice, note that it is an export of services and that GST is zero-rated. Example: "Export of services under GST. Zero-rated supply. IGST: Nil."

If you are GST-registered and exporting services, you can claim a refund of the GST you paid on your business expenses (Input Tax Credit refund), which is one reason many freelancers with international clients choose to register voluntarily.

Common mistakes and how to avoid them

Charging CGST + SGST on an inter-state invoice. This is the most common error. If your client is in a different state, you must charge IGST. Charging CGST + SGST instead means your client cannot claim the correct ITC, and you may receive a compliance notice.

Charging IGST on an intra-state invoice. The reverse error. Less common but equally problematic for the same reasons.

Using the wrong state for an unregistered client. For unregistered clients, the place of supply may require you to determine the client's address more carefully. When in doubt, ask the client for their billing address.

Not showing CGST and SGST as separate lines. GST law requires CGST and SGST to be shown separately on the invoice, not combined as a single 18% line. Your invoice must show CGST: Rs. X and SGST: Rs. X on separate rows.

Applying the wrong GST rate. Most services fall under 18%. Some categories attract 12%, 5%, or are exempt. Know the rate that applies to your specific service. If you are unsure, check the GST rate for your SAC code.

How to check which GST type to charge: a quick flowchart

Step 1: Where is your business registered for GST? (Your state)

Step 2: Where is your client located? (Their state)

Step 3: Are they the same state?

• Yes: Charge CGST + SGST (each at half the applicable rate)
• No: Charge IGST (at the full applicable rate)

Step 4: Is the client outside India?

• Yes: Zero-rated. No GST charged. Note on invoice.

That is the complete decision process. Four steps, one answer.

How the Invoice Generator handles this for you

The Invoice Generator on EasyQuickTool calculates the tax amount automatically once you enter the rate.

For intra-state invoices: enter CGST at 9% and SGST at 9% as separate fields. The tool calculates each amount and adds them to the total.

For inter-state invoices: enter IGST at 18% as a single field. The tool calculates the amount and adds it to the total.

You do not need to do the math. You just need to know which type applies, which you now do.

Create your GST invoice now, free