CGST, SGST, and IGST: Complete Guide to Indian GST Calculation with Practical Examples
Elvora Compliance Team
Tax Architecture & Accounting Research
Executive Summary & Key Takeaways
A clear, practical breakdown of Indian Goods and Services Tax components, when to apply which tax, and how to verify invoice accuracy.
- Intra-state transactions (within the same state) are split equally into CGST and SGST.
- Inter-state transactions (between different states) attract IGST at the full slab rate.
- Place of Supply determines which tax type applies, not the physical location of checkout.
- Input Tax Credit (ITC) utilization follows a strict sequence: IGST credit first, then CGST/SGST.
1. The Fundamental Structure of GST in India
India adopted a dual GST model to empower both the Central Government and State Governments to levy taxes on a common tax base simultaneously.
To properly issue bills, every merchant must distinguish between Intra-State Supply and Inter-State Supply.
- CGST (Central Goods and Services Tax): Revenue collected by the Central Government on intra-state supplies.
- SGST (State Goods and Services Tax): Revenue collected by the respective State Government on intra-state supplies.
- IGST (Integrated Goods and Services Tax): Levied on all inter-state supplies and imports, collected by the Centre and apportioned between Centre and States.
2. Practical Calculation Example
Suppose a merchant in Noida, Uttar Pradesh (State Code 09) sells a power tool worth ₹10,000 with an 18% GST slab.
Scenario A: Sale to a customer in Lucknow, Uttar Pradesh (Intra-state): • Taxable Amount = ₹10,000 • CGST (9%) = ₹900 • SGST (9%) = ₹900 • Total Bill = ₹11,800
Scenario B: Sale to a buyer in Jaipur, Rajasthan (Inter-state): • Taxable Amount = ₹10,000 • IGST (18%) = ₹1,800 • Total Bill = ₹11,800
3. Common Billing Pitfalls to Avoid
The most frequent error detected during GST audits is charging CGST/SGST on an inter-state sale or failing to record the buyer's 2-digit State Code correctly.
Elvora automatically inspects the buyer's GSTIN and state code against your store's jurisdiction code, instantly routing tax to CGST/SGST or IGST without manual cashier decisions.
Frequently Asked Questions
What happens if I accidentally charge CGST/SGST instead of IGST?
Under Section 77 of the CGST Act, you must pay the correct IGST and claim a refund for the wrongly deposited CGST/SGST. Using automated software prevents this costly mistake.
Streamline Your Indian Store with Elvora
Experience keyboard-first counter billing, precision decimal GST compliance, and real-time stock audit in a unified multi-tenant SaaS.