CGST, SGST and IGST Explained for Freelancers and Agencies

CGST and SGST apply together when you and your client are in the same state, splitting the GST rate equally between the central and state governments. IGST applies instead as a single tax whenever the client is in a different state. The total tax is always the same — only how it's split changes.

What are CGST, SGST, and IGST

GST in India isn't one single tax — it's collected as up to three components depending on where the transaction happens:

• CGST (Central GST) — the central government's half of the tax on an intra-state supply.
• SGST (State GST) — the state government's half of the tax on the same intra-state supply, charged alongside CGST.
• IGST (Integrated GST) — a single tax covering both the center's and the destination state's share, charged instead of CGST/SGST when the supply crosses state lines.

Every invoice you issue as a GST-registered freelancer or agency uses one of these two combinations — CGST + SGST, or IGST — never all three, and never IGST alongside CGST/SGST on the same line item.

When each one applies — intra-state vs inter-state supply

The split depends entirely on where the supply is deemed to happen relative to your registration — not on what you're selling, what industry you're in, or how the client pays you.

Intra-state supply — same state on both sides

If your GST registration and your client's place of supply are in the same state, the transaction is intra-state. You split the applicable GST rate equally into CGST and SGST. An 18% rate becomes 9% CGST + 9% SGST; a 5% rate becomes 2.5% CGST + 2.5% SGST.

Inter-state supply — different states

If your client's place of supply is in a different state from your registration, the transaction is inter-state. You charge the full rate as IGST in a single line — no CGST/SGST split at all. An 18% rate is charged as 18% IGST.

This also covers exports and supplies to a Special Economic Zone (SEZ), which GST law treats as inter-state supplies regardless of the physical location involved.

Place of supply basics — the rule that decides the split

"Place of supply" is the GST term for which state a transaction is deemed to occur in, and it's what you compare against your own registration to decide CGST/SGST vs IGST. For most services billed to a business client, place of supply is the buyer's registered address. For services billed to an individual without a GSTIN, it's usually their address on file, or your own location if no address is available. For goods, it's typically the delivery location, not the billing address.

Place of supply matters even when it seems obvious. A client with a head office in one state but a GSTIN registered in another counts by the GSTIN's state, not the office you're used to mailing invoices to.

Worked example: splitting tax both ways

A freelance app developer registered in Karnataka bills two clients for identical ₹50,000 projects at an 18% GST rate.

Client A — also registered in Karnataka (intra-state supply):

Client B — registered in Maharashtra (inter-state supply):

Both invoices total the same ₹59,000. The only difference is that Client A's invoice shows two tax lines worth ₹4,500 each, while Client B's shows one line worth ₹9,000 — because the split is determined by place of supply, not by the amount being billed.

Common mistakes with CGST/SGST vs IGST

• Charging IGST for an intra-state supply — easy to do if you default to IGST out of habit for B2B clients, even when the client happens to be registered in your own state.
• Charging CGST/SGST for an inter-state supply — the opposite mistake, common when a client's billing address looks local but their GSTIN is registered in a different state.
• Using the office address instead of the GSTIN's registered state — a client's head office and their GST registration state aren't always the same; the GSTIN wins.
• Treating IGST as "double tax" — it isn't. IGST is a single tax at the full rate, equivalent in total to CGST + SGST combined, not an additional charge on top.

If you're still working through the rest of the invoice, how to create a GST invoice step-by-step covers the full field-by-field process, and the GST invoice mandatory fields checklist lists exactly where place of supply and the tax split need to appear on the document itself.

Let the split calculate itself

Manually deciding CGST/SGST vs IGST and doing the percentage math on every invoice is where most of these mistakes creep in. The GST Calculator takes your taxable value and rate and returns the correct CGST/SGST or IGST breakdown instantly, so you're not relying on doing the arithmetic — or the place-of-supply check — by hand every time.

For freelancers and agencies who bill clients across multiple states regularly, see Dharayana plans to generate fully split, compliant invoices without recalculating the tax type for every client.

Frequently asked questions

What is the difference between CGST, SGST, and IGST?

CGST and SGST are two halves of the same GST rate, charged together when the buyer and seller are in the same state — one half goes to the central government, the other to the state government. IGST is a single tax charged at the full rate when the supply crosses state lines, collected by the central government and then apportioned to the destination state.

How do I know whether to charge CGST/SGST or IGST on an invoice?

Compare your registered place of business to the buyer's place of supply, not to what you're selling. Same state means CGST + SGST, split equally. Different states means IGST at the full rate. Nothing about the goods or service itself decides this — only the two locations do.

Does the total tax amount change between a CGST/SGST invoice and an IGST invoice?

No. An 18% GST rate is always 18% in total — either 9% CGST + 9% SGST, or 18% IGST. Only how the tax is split and reported changes; the buyer's total cost is identical either way.

What happens if I charge IGST on an intra-state supply by mistake, or vice versa?

The invoice is treated as incorrectly taxed even though the total amount may be right, and it can block the buyer's input tax credit claim or trigger a mismatch during GSTR-1/GSTR-3B reconciliation. The fix is usually a credit note to reverse the wrong tax type and a fresh invoice with the correct split.

Who actually receives CGST, SGST, and IGST — the central or state government?

CGST goes to the central government and SGST goes to the state government where the supply is consumed. IGST is collected centrally on inter-state supplies and then settled between the center and the destination state, so the buyer's state still gets its share even though only one tax line appears on the invoice.

Ready to stop second-guessing the split? Try the GST Calculator — enter the amount and rate, and it works out the correct CGST/SGST or IGST breakdown for free.