CGST, SGST and IGST Explained Simply
Why Three Components Exist
India runs a dual GST model because the Constitution gives both the Centre and the States the power to tax the supply of goods and services. Instead of two separate, uncoordinated tax systems, the GST Council designed a unified structure that splits the tax collected on every transaction between the Centre and the destination State, while keeping a single, harmonised rate structure nationwide. This is why every invoice you receive shows either CGST+SGST or IGST rather than a single "GST" line — the split determines who receives the revenue, not how much tax you pay overall.
What is CGST
Central Goods and Services Tax (CGST) is the portion of GST collected by the Central Government on an intra-state sale — meaning the seller and buyer are in the same state. If a product attracts 18% GST and is sold within Delhi, 9% is charged as CGST and goes to the Centre, while the remaining 9% is charged as SGST and goes to the Delhi government. CGST is governed by the CGST Act, 2017, and its rates are notified by the GST Council alongside SGST rates for perfect symmetry.
What is SGST
State Goods and Services Tax (SGST) mirrors CGST but is collected by the respective State Government for intra-state transactions. Each state has its own SGST Act (largely uniform in structure across states), and SGST revenue funds state budgets directly. For Union Territories without a legislature, an equivalent tax called UTGST applies instead of SGST, following identical rate logic.
What is IGST
Integrated Goods and Services Tax (IGST) applies when the seller and buyer are in different states (inter-state supply), or on imports into India. Rather than splitting the transaction into two components, the full GST rate is charged as a single IGST amount, collected by the Centre, and then apportioned to the destination state based on where the goods or services are ultimately consumed. This "destination-based" principle ensures the state where consumption happens receives its due share, even though the seller may be located elsewhere. Try our Standard GST Calculator to see IGST computed instantly by toggling the transaction type.
Comparison Table
| Component | Applies When | Collected By | Rate |
|---|---|---|---|
| CGST | Intra-state sale | Central Govt | Half of slab rate |
| SGST | Intra-state sale | State Govt | Half of slab rate |
| IGST | Inter-state sale / import | Central Govt (apportioned to state) | Full slab rate |
Practical Calculation Examples
Consider a Delhi-based retailer selling goods worth ₹10,000 at the 18% slab to a customer also in Delhi. This is an intra-state sale, so CGST = ₹900 (9%) and SGST = ₹900 (9%), giving a total invoice value of ₹11,800. Now consider the same retailer selling identical goods to a customer in Maharashtra. This is inter-state, so IGST = ₹1,800 (18%) is charged as a single line item, and the invoice total remains ₹11,800 — the buyer pays the same amount either way, only the tax breakdown differs.
ITC Flow Across States
Input Tax Credit can be used across CGST, SGST and IGST, but with a defined priority order: IGST credit must first be used against IGST liability, then CGST, then SGST. CGST credit can be used against CGST and then IGST liability (never against SGST), and SGST credit follows the mirror rule against SGST then IGST. This cross-utilisation keeps the system revenue-neutral between Centre and States while letting businesses fully offset tax paid on inputs regardless of which component it was originally paid under. Estimate your own position with the ITC Estimator.