Difference Between CGST, SGST, and IGST

Get a clear understanding of the difference between CGST, SGST, and IGST, and their role in India’s GST tax structure.
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3 min
23 June 2025

Confused about CGST, SGST, and IGST in India? These terms represent different components of the Goods and Services Tax (GST), India's unified tax system on goods and services. CGST (Central GST) and SGST (State GST) are levied on transactions within a single state, whereas IGST (Integrated GST) applies to inter-state sales or imports. Each category has its own specific guidelines and tax rates. Understanding these differences is crucial for accurate and smooth tax compliance. Additionally, for international transactions, services like Wise provide real exchange rates and minimal fees, offering an economical and convenient way to handle overseas payments.

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Introduction to CGST, SGST, and IGST

The GST structure in India is divided into three main components: Central Goods and Services Tax (CGST), State Goods and Services Tax (SGST), and Integrated Goods and Services Tax (IGST). This division helps streamline tax collection and ensures proper revenue distribution between the central and state governments. Businesses also need to consider the GST registration fees when registering under the GST system to comply with regulatory requirements.

CGST is the tax collected by the Central Government on an intra-state supply of goods and services. It is governed by the Central Goods and Services Tax Act, 2017, and ensures that the central government receives its share of revenue from within the state.

SGST is the counterpart of CGST, collected by the State Governments on intra-state transactions. The State Goods and Services Tax Act, 2017, governs it, and the revenue collected under SGST remains with the state where the supply is made.

IGST applies to inter-state transactions and imports. It is governed by the Integrated Goods and Services Tax Act, 2017. The revenue collected under IGST is shared between the Central and State Governments based on a predetermined formula. IGST facilitates seamless trade between states and helps maintain a unified market across India.

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These three components ensure a balanced distribution of tax revenue and prevent tax evasion, providing a transparent and efficient tax system. To better understand key aspects of GST, explore the features of GST, which provide deeper insights into its working.

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Difference between CGST, SGST, and IGST

Aspect CGST (Central Goods and Services Tax) SGST (State Goods and Services Tax) IGST (Integrated Goods and Services Tax)
Applicability Intra-state transactions Intra-state transactions Inter-state transactions and imports
Governing Authority Central Government State Government Central Government
Revenue Distribution Central Government State Government Shared between Central and State Governments
Law Central Goods and Services Tax Act State Goods and Services Tax Act Integrated Goods and Services Tax Act
Example Sale of goods within Maharashtra Sale of goods within Karnataka Sale of goods from Maharashtra to Gujarat

 

How are SGST, CGST and IGST collected?

CGST and SGST collection:

  • Collected on intra-state transactions.
  • The CGST portion goes to the central government, while the SGST portion is credited to the state government where the sale occurs.

IGST collection:

  • Collected on inter-state transactions and imports.
  • The central government collects IGST, which is later apportioned between the centre and states.

Businesses must also understand the uin under GST for tracking and unique identification of taxpayers.

Returns filing:

  • Businesses must file GST returns, specifying the CGST, SGST, and IGST collected.
  • The returns help in the systematic distribution of taxes to respective authorities.

Why is split into SGST, CGST, and IGST?

Revenue sharing:

  • Ensures fair distribution of tax revenue between the central and state governments.

Compliance and governance:

  • Facilitates compliance and governance, allowing both central and state authorities to monitor and administer taxes.

Market integration:

  • Supports a unified national market by ensuring that tax policies do not differ significantly across states. 

How are input tax credits adjusted? Offset liability in GST?

Input tax credit (ITC) allows businesses to reduce their tax liability by claiming credit for taxes paid on inputs. Under GST, ITC can be used to offset the tax liability in the following order:

  • CGST: ITC on CGST can be used to offset CGST liability. Any remaining ITC can be utilised against IGST liability.
  • SGST: ITC on SGST can be used to offset SGST liability. Any leftover ITC can offset IGST liability but not CGST.
  • IGST: ITC on IGST can first offset IGST liability, followed by CGST and then SGST.

Conclusion

The GST system in India, encompassing CGST, SGST, and IGST, provides a structured and transparent tax framework, facilitating ease of doing business. The separation into these three components ensures efficient tax collection and fair revenue distribution between the central and state governments. Businesses benefit from the streamlined input tax credit mechanism, which helps manage cash flows and reduce tax burdens. This comprehensive approach to taxation not only simplifies compliance but also fosters economic growth, making it easier for businesses to navigate the financial landscape. For those looking to expand or strengthen operations under this tax framework, opting for a secured business loan can provide the necessary capital with stability and assurance.

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Frequently asked questions

What makes guerrilla marketing campaigns successful?
Guerrilla marketing campaigns succeed through creativity, surprise, and emotional engagement. They captivate audiences with unexpected, memorable experiences, making the brand stand out. Effective campaigns are well-timed, highly targeted, and resonate with the audience's interests or values. They often leverage social media to amplify reach and generate buzz. The key to success lies in delivering a unique, impactful message that encourages sharing and discussion, thereby maximising visibility and brand recognition without a large budget.

Is guerrilla marketing illegal?
Guerrilla marketing is not inherently illegal, but it can sometimes approach the boundaries of legality. The legality of such campaigns depends on the methods and locations used. Activities in public spaces often require permits, and failing to obtain them can result in fines or legal action. Additionally, deceptive practices or misleading advertising may lead to regulatory penalties. Therefore, businesses must ensure that their campaigns comply with local laws and regulations to avoid legal issues and potential backlash.

Who collects CGST, SGST, and IGST?

CGST is collected by the Central Government, SGST by the respective State Government, and IGST is collected by the Central Government and later shared with the destination state.

When is IGST applicable instead of CGST and SGST?

IGST is applicable when a transaction involves inter-state trade or commerce, including imports and exports, whereas CGST and SGST apply to intra-state transactions.

Can input tax credit (ITC) be claimed for CGST, SGST, and IGST?

Yes, ITC can be claimed for all three. However, credits must be utilised in a specific order, and cross-utilisation between CGST and SGST is not permitted.

Is GST registration different for CGST, SGST, and IGST?

No, GST registration is unified. A single GSTIN covers CGST, SGST, and IGST compliance, depending on the nature of the transaction.

How are CGST and SGST calculated for intra-state sales?

For intra-state sales, the GST rate is equally split between CGST and SGST. For example, if the GST rate is 18%, 9% is CGST and 9% is SGST.

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