GST in India is collected under separate heads so that the centre and the states each get their share. Every taxable sale carries either CGST and SGST together, or IGST alone. The total tax is the same either way. What changes is who receives it and how your input tax credit can be used.
01The four heads
| Head | Full name | Charged on | Goes to |
|---|---|---|---|
| CGST | Central GST | Sales within a state | Centre |
| SGST | State GST | Sales within a state | That state |
| UTGST | Union Territory GST | Sales within a union territory without a legislature | That UT |
| IGST | Integrated GST | Sales between states, imports, exports and SEZ supplies | Centre, then shared with the consuming state |
UTGST applies in Chandigarh, Ladakh, Lakshadweep, the Andaman and Nicobar Islands, and Dadra and Nagar Haveli and Daman and Diu. Delhi, Puducherry and Jammu and Kashmir have legislatures and use SGST.
02Which one goes on the invoice
It depends on two things: where you are, and the place of supply.
- Same state
- CGST and SGST, each half the rate.
- Different states
- IGST at the full rate.
| Sale by an Ahmedabad CP fittings dealer, ₹50,000 at 18% | Tax |
|---|---|
| To a plumber in Vadodara (Gujarat) | CGST ₹4,500 + SGST ₹4,500 |
| To a builder in Udaipur (Rajasthan) | IGST ₹9,000 |
| To a buyer in Dubai, exported under LUT | No IGST charged |
The total is ₹59,000 in both domestic cases.
03How input tax credit is used
Credit under each head can only be used in a set order, laid down in section 49 of the CGST Act and rule 88A:
- IGST credit first. It pays IGST, then CGST and SGST in any proportion. IGST credit must be used up before CGST or SGST credit is touched.
- CGST credit pays CGST, then IGST.
- SGST credit pays SGST, then IGST.
- CGST and SGST credit never cross. CGST credit cannot pay SGST, and SGST credit cannot pay CGST.
A worked example
A Ludhiana hosiery maker's month looks like this:
| Head | Tax on sales | Credit available |
|---|---|---|
| IGST | ₹50,000 | ₹70,000 |
| CGST | ₹30,000 | ₹10,000 |
| SGST | ₹30,000 | ₹10,000 |
| Total | ₹1,10,000 | ₹90,000 |
The IGST credit of ₹70,000 pays the IGST of ₹50,000. The ₹20,000 left over is split, say ₹10,000 to CGST and ₹10,000 to SGST. That leaves ₹20,000 of CGST and ₹20,000 of SGST. CGST credit of ₹10,000 and SGST credit of ₹10,000 bring each down to ₹10,000, which is paid in cash. Total cash: ₹20,000.
The GST portal suggests a split in GSTR-3B, and you can change it. Check that CGST or SGST credit is not left sitting unused while you pay cash on the same head.
Reverse charge is paid in cash
Tax you owe as a buyer under reverse charge cannot be paid from credit. It is paid in cash, and then claimed back as credit where allowed.
04Credit belongs to a GSTIN
Credit sits with the GSTIN on the invoice. A business with GSTINs in Gujarat and Maharashtra cannot move SGST credit from one to the other. If the Mumbai branch is billed for something the Ahmedabad office uses, the credit stays in Maharashtra.
05Moving stock between your own branches
GSTINs on the same PAN are treated as separate persons. When a Morbi tile maker sends stock from its Gujarat factory to its own depot in Rajasthan, it raises a tax invoice to its Rajasthan GSTIN and charges IGST, even though no sale has taken place. The Rajasthan depot claims that IGST as credit and uses it when it sells. Transfers between branches in the same state, under one GSTIN, carry no GST and move on a delivery challan.
06When the wrong head was charged
Mistakes happen, especially with bill-to-ship-to orders and service clients whose office and site are in different states.
If you charged IGST on what was an intra-state sale, or CGST and SGST on an inter-state one:
- Pay the correct tax.
- Claim a refund of the tax paid under the wrong head, within two years of paying the correct tax.
- No interest is charged on the correct tax paid this way.
The buyer should reverse any credit taken under the wrong head and claim it under the right one once your corrected invoice or credit note appears in their GSTR-2B.
07Cess
Compensation cess, once charged on top of GST on many goods, was removed from most of them from 22 September 2025. Where a cess still applies, it is shown as a separate line on the invoice, and cess credit can pay only cess.
08Checking the tax lines on a purchase bill
The same rules apply in reverse when you check a supplier's bill. A Gujarat supplier delivering to your Gujarat factory should show CGST and SGST. A supplier from Maharashtra should show IGST. If the heads are wrong, the credit may appear in your GSTR-2B as not available, or be questioned later. Ask for a credit note and a corrected invoice before you pay the GST part, and keep the email.
09Supplies to SEZ units
A supply to a unit or developer in a Special Economic Zone is treated as inter-state, even when the SEZ is in your own state. A Vadodara cable maker selling to an SEZ unit near Ahmedabad bills it as a zero-rated supply: without IGST under a Letter of Undertaking, or with IGST and a refund claim later. It never carries CGST and SGST. The SEZ unit's authorisation for the goods should be on file before the first dispatch.
This guide is general information as of October 2026 and does not amount to tax advice.
MatruOS reads both states on each invoice and splits the tax into CGST and SGST or IGST.