CGST vs SGST: What is the Difference?
taxDefinition
CGST (Central GST) is the portion of GST collected by the Central Government, while SGST (State GST) is collected by the State Government on intra-state supply of goods or services. Both are charged at equal rates that together make up the total GST rate. For inter-state transactions, IGST (Integrated GST) is charged instead, which combines both CGST and SGST.
Detailed Explanation
When you buy a product within the same state (intra-state), you pay both CGST and SGST, with each being half of the total GST rate. For example, at an 18% GST rate: 9% goes to the Central Government as CGST and 9% goes to the State Government as SGST.
When a business sells to a buyer in a different state (inter-state), IGST applies at the full rate. The IGST revenue is then shared between the Central and State governments based on the destination state.
From a business owner's perspective, the tax names on your invoice matter: correctly classifying CGST + SGST (intra-state) vs. IGST (inter-state) is legally required for GST compliance and affects your Input Tax Credit (ITC) eligibility.
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