CGST vs SGST vs IGST: Understanding India's GST Structure

India's GST system splits tax collection between central and state governments through three components: CGST, SGST, and IGST. Understanding the difference is essential for correct invoicing and compliance.

CGST (Central GST) is the portion of GST collected by the central government. SGST (State GST) is the portion collected by the state government. For intra-state transactions (within the same state), the total GST rate is split 50/50 between CGST and SGST. For example, on an 18% GST invoice within Maharashtra, 9% goes as CGST (to the central government) and 9% as SGST (to Maharashtra).

IGST (Integrated GST) applies to inter-state transactions (between different states). It equals the total GST rate (CGST + SGST combined). The central government collects IGST and later apportions the state's share to the destination state. IGST also applies to imports and exports.

On invoices: For intra-state sales, show CGST and SGST as separate line items. For inter-state sales, show a single IGST line item. The total tax amount is the same in both cases — only the display format differs.

Input Tax Credit: Businesses can claim credit for GST paid on purchases (input GST) against GST collected on sales (output GST). This prevents cascading taxation — the hallmark of the pre-GST era that GST was designed to eliminate.