Is the total GST higher on inter-state sales than on intra-state sales?

No. The total tax is the same. On an intra-state supply, GST is split into CGST and SGST, whose rates add up to the single IGST rate charged on an inter-state supply. So a good taxed at 18% pays 9% CGST plus 9% SGST within a state, or 18% IGST across states — the same overall burden.

Who receives the revenue from CGST, SGST and IGST?

CGST goes to the Central Government and SGST goes to the State Government where the supply is consumed. IGST is collected by the Centre and then apportioned between the Centre and the destination state, because GST is a destination-based consumption tax.

What is UTGST and how is it different from SGST?

UTGST, or Union Territory GST, works exactly like SGST but applies in Union Territories that do not have their own legislature. In those territories, an intra-territory supply attracts CGST plus UTGST instead of CGST plus SGST.

How do I know whether to charge CGST plus SGST or IGST?

It depends on the place of supply. If the supplier's location and the place of supply are in the same state or Union Territory, charge CGST and SGST. If they are in different states or Union Territories — or the transaction is an import or export — charge IGST.

Can input tax credit be used across CGST, SGST and IGST?

Yes, subject to rules set out in the GST law. IGST credit can be used to pay IGST, then CGST, then SGST. CGST and SGST credits have their own ordering, and CGST credit generally cannot be used to pay SGST or vice versa. Always follow the current utilisation rules on the GST portal.

Difference Between CGST, SGST and IGST Explained

CGST, SGST and IGST are the three main components of India’s Goods and Services Tax. CGST (Central GST) and SGST (State GST) are charged together on supplies made within a single state, while IGST (Integrated GST) is charged on supplies that move between states and on imports. The total tax remains the same; only who collects it changes.

Why does GST have three components?

India is a federal country where both the Centre and the states have the constitutional power to tax. When GST replaced a tangle of earlier indirect taxes, the design had to let both levels of government share the revenue fairly. The solution was to split the tax on within-state transactions between the Centre and the state, and to use a single integrated tax for cross-border transactions that is later apportioned.

The framework is administered by the Central Board of Indirect Taxes and Customs (CBIC), with rates and structural decisions taken by the GST Council, a joint body of the Centre and the states.

What is CGST?

Central Goods and Services Tax (CGST) is the portion of GST that the Central Government collects on an intra-state supply — that is, a transaction where the supplier and the place of supply are in the same state or Union Territory. It is governed by the Central Goods and Services Tax Act. On any within-state sale, CGST is charged alongside SGST, and each usually takes half of the applicable rate.

What is SGST?

State Goods and Services Tax (SGST) is the portion collected by the State Government on the same intra-state supply. It is governed by each state’s SGST Act. The revenue accrues to the state where the goods or services are consumed, reflecting GST’s nature as a destination-based tax. In Union Territories without a legislature, an equivalent tax called UTGST takes the place of SGST.

What is IGST?

Integrated Goods and Services Tax (IGST) applies when a supply crosses state lines — an inter-state transaction — and also on imports into India. Instead of separately charging a central and a state tax, a single IGST is levied at a rate equal to the sum of the CGST and SGST rates. The Central Government collects IGST first and then apportions the state’s share to the destination state, ensuring the consuming state still receives its due.

How do the three compare side by side?

The clearest way to see the difference is to line them up against the type of transaction, the collecting authority and the governing law.

Feature	CGST	SGST	IGST
Applies to	Intra-state supply	Intra-state supply	Inter-state supply and imports
Collected by	Central Government	State Government	Central Government (then shared)
Charged with	SGST	CGST	Levied on its own
Governing law	CGST Act	State SGST Act	IGST Act
Revenue goes to	Centre	Consuming state	Centre and destination state

A worked example

Suppose a trader in Maharashtra sells goods worth 10,000 rupees that attract an 18% GST rate. Consider two scenarios.

Sale within Maharashtra (intra-state): The 18% splits into 9% CGST (900 rupees to the Centre) and 9% SGST (900 rupees to Maharashtra). The buyer pays 1,800 rupees in tax.
Sale to a buyer in Gujarat (inter-state): A single 18% IGST of 1,800 rupees is charged. The Centre collects it and apportions Gujarat’s share, since Gujarat is where the goods are consumed.

In both cases the buyer pays 1,800 rupees. The only difference is how the money is divided between governments.

How is the place of supply decided?

The single most important factor is the place of supply, a concept defined in the GST law. If the location of the supplier and the place of supply fall in the same state or Union Territory, the transaction is intra-state and attracts CGST plus SGST. If they fall in different states or Union Territories, it is inter-state and attracts IGST. Special rules determine the place of supply for services, e-commerce and cross-border trade, so businesses must apply the correct provision to each transaction.

What about input tax credit?

One of GST’s core features is input tax credit, which lets a registered business set off the tax it pays on purchases against the tax it collects on sales. The three components have specific rules on how credit can be used. Broadly, IGST credit is used first to pay IGST and can then be applied to CGST and SGST; CGST and SGST credits follow their own ordering, and one generally cannot be cross-used against the other. Because these utilisation rules are periodically refined, businesses should follow the current guidance on the official GST portal.

Why the distinction matters for businesses

Charging the wrong component — for instance, levying CGST and SGST on what is actually an inter-state supply — creates compliance problems and mismatches in returns. Correct classification ensures the right government receives the revenue, input credit flows smoothly, and invoices stand up to scrutiny. For consumers, the takeaway is simpler: the label on the invoice may differ, but the total GST paid on the same product is identical whether it is bought locally or from another state.

How did GST replace India’s earlier taxes?

Before July 2017, India taxed goods and services through a patchwork of central and state levies — such as central excise duty, service tax, state value added tax (VAT), and various cesses and surcharges. Goods often bore tax at several stages without full credit for tax already paid, a problem known as the cascading of taxes, or ‘tax on tax’. Compliance was fragmented because each state ran its own system.

GST unified most of these into a single framework with a common structure across the country. By allowing input tax credit to flow through the chain, it reduced cascading, and by dividing the tax into CGST, SGST and IGST, it preserved the revenue rights of both the Centre and the states. The three components are therefore the mechanism that made a nationwide tax workable within a federal structure.

Who decides the rates and rules?

The GST Council is the apex decision-making body for GST. Chaired by the Union Finance Minister and including the finance ministers of the states, it recommends the tax rates, exemptions, thresholds and structural changes. Its recommendations are then given effect through the central and state laws. The CBIC administers the central components and customs, while the GST Network (GSTN) runs the technology backbone — the portal on which registration, returns and payments happen. This shared architecture is what keeps the CGST, SGST and IGST system aligned across states.

Common mistakes businesses make

Because the correct component depends on the place of supply, errors tend to cluster around that judgement. Frequent slip-ups include:

Charging CGST and SGST on a genuinely inter-state supply, or IGST on an intra-state one.
Getting the place of supply wrong for services delivered remotely or across state lines.
Mismatched details between the supplier’s and recipient’s returns, which can block input credit.
Applying credit in the wrong order and against the wrong component.

Such errors can usually be corrected, but they cause delays and reconciliation work. Careful attention to the place of supply on every invoice is the simplest safeguard.

The bottom line

CGST, SGST and IGST are not three separate taxes stacked on top of each other but a single GST split according to where a transaction takes place. Within a state, the Centre and the state share it as CGST and SGST; across states, the Centre collects IGST and passes on the destination state’s share. This is general information; for specific compliance questions, refer to CBIC, the GST Council and the official GST portal.