CGST, SGST or IGST: which GST to charge on your invoice

Every GST invoice has to answer one question before the tax can be worked out: is this supply within one state, or between states? Within a state you charge CGST and SGST (or UTGST); between states you charge IGST. Get it wrong and your buyer may not be able to claim input tax credit, and you will have to correct the invoice and pay the right tax.

This guide explains the four kinds of GST you see on invoices, the rule that decides between them, and how to handle the common edge cases. The free GST invoice generator applies the rule for you from your state and the place of supply.

The four kinds of GST on an invoice

The rate is the same in every case. An 18% item is charged either CGST 9% + SGST 9% or IGST 18%. The buyer's total does not change; what changes is how the tax is shared between the centre and the states.

The rule: compare your location with the place of supply

A supply is intra-state when your location (the state you are registered in for that business) and the place of supply are in the same state or union territory. It is inter-state when they differ.

• Intra-state: charge CGST + SGST, each at half the rate.
• Intra-state in a union territory without a legislature: charge CGST + UTGST.
• Inter-state: charge IGST at the full rate.

So the real work is finding the place of supply.

Finding the place of supply

The IGST Act sets out where a supply takes place. The general rules cover most small businesses:

• Goods that move: the place where the movement ends — usually the delivery address.
• Goods that don't move: where they are when the buyer takes them.
• Services to a registered buyer: the buyer's location, which is the state in their GSTIN.
• Services to an unregistered buyer: the buyer's address on record, or your own location if you have no address for them.

Special rules apply to services linked to immovable property (where the property is), restaurant and personal services (where they are performed), event admission, passenger and goods transport, and a few more. If your supply is one of these, check the rule before you invoice.

The invoice must print the place of supply with the state name and code, for example "Karnataka (29)". In Invoice Native it is filled in automatically — from the buyer's GSTIN, their shipping address or their billing address, in that order — and you can override it.

Worked examples

Say you run a design studio registered in Maharashtra (state code 27) and invoice ₹50,000 for services at 18%.

Now say the studio is registered in Chandigarh (04), a union territory without a legislature, and bills a client in Chandigarh. The supply is intra-territory, so the tax is CGST ₹4,500 + UTGST ₹4,500.

When one invoice mixes rates — say ₹20,000 of design at 18% and ₹5,000 of printed material at 5% — each rate is split separately, and the invoice shows a tax summary per rate. The generator builds that summary for you.

Edge cases that trip people up

The buyer's GSTIN is from another state than the delivery address. For goods, the delivery address decides where movement ends. Under the "bill to – ship to" rule, when you deliver goods to a third party on the buyer's instructions, the place of supply is the buyer's principal place of business. When this happens, check the place of supply on the invoice before you issue it.

You have registrations in two states. Each GSTIN is treated as a separate person. Invoice from the registration that makes the supply, and compare that state with the place of supply.

Exports and SEZ supplies. These are always inter-state, even when the SEZ unit is in your own state. Under a letter of undertaking the invoice is zero-rated and carries an export endorsement instead of IGST. See export of services under LUT.

You are not charging GST at all. Composition dealers and unregistered sellers never show CGST, SGST or IGST. A composition dealer issues a bill of supply instead.

What goes wrong when the split is wrong

If you charge CGST + SGST on a supply that was inter-state (or the reverse), the tax has gone to the wrong government. You have to pay the correct tax and claim a refund of what you paid under the wrong head; no interest is charged on the correct tax in that situation. Meanwhile your buyer's input tax credit may be held up until the invoice is corrected, which is usually what makes them call you.

The simplest protection is to check the place of supply line on every invoice before you send it. It is printed next to your own state, so a mismatch is easy to spot.

How Invoice Native handles it

• You enter your state once, in your business details.
• Each invoice works out the place of supply from the buyer and shows whether the supply is intra-state (CGST + SGST), in a union territory (CGST + UTGST) or inter-state (IGST).
• Every line carries its own GST rate, and the tax summary shows each rate with its split.
• Exports and SEZ supplies are a supply type: under LUT no tax is charged and the endorsement is printed; with payment, IGST is charged.

The generator does the arithmetic; the place of supply is still your call when your case is unusual. If in doubt, check with a chartered accountant. For the full list of what a tax invoice must show, see the GST invoice format.