Difference Between CGST and SGST and IGST: All You Need To Know

Updated on: 28 Dec 2023

It is crucial to know the difference between CGST and SGST, and IGST to file accurate returns. To further the ‘One Nation, One Tax’ policy, the Government of India introduced a new indirect tax regime called the GST in 2017. These three categories of GST simplify interstate and intrastate transactions.

To learn what is IGST, CGST and SGST and the differences between them, read on.

What is IGST?

Integrated Goods and Services Tax, or IGST for short, applies to the supply of goods and services across two or more states and their import and export in and out of India. The Central Government collects and distributes these taxes among the centre and the states.

For instance, if a trader from Telangana sells a good worth ₹2 lakhs to a customer from West Bengal, Integrated GST will apply. Supposing the applicable IGST rate is 18%, the buyer must pay ₹36,000.

What is CGST and SGST?

CGST and SGST full forms are Central Goods and Services Tax and State Goods and Services Tax. The Central Government has the authority to levy and collect CGST on the intrastate supply of goods and services. So, what is SGST?

A similar rate of SGST applies to intrastate supplies, which the concerned state government governs. The Central Government introduced it to merge previous state-level taxes, like the value-added tax, entertainment tax, luxury tax, entry tax and so on.

In other words, Central and State Governments combine their levies and agree on equal revenue-sharing. So, if a trader from Gujarat sells a good within the same state, both CGST and SGST will apply. According to the GST Act, the CGST and SGST rates on intrastate supplies cannot exceed 14%, i.e., the combined rate cannot be more than 28%.

Difference between IGST, CGST and SGST

Now that you know what is CGST, SGST and IGST, you must understand the things that set each of them apart. Check the following table to know the difference between CGST and SGST, along with IGST.

Basis	IGST	CGST	SGST
Applicability	Inter-state supply of goods and services	Intrastate supply of goods and services	Intrastate supply of goods and services
Collecting Authority	Central Government	Central Government	State Governments
Revenue Distribution	Between Central and State Government	Central Government	State Governments
Input Tax Credit Adjustment	You can use Input Tax Credit (ITC) either on IGST, CGST, or SGST	You can use ITC either on IGST or CGST	You can use ITC either on IGST or SGST

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FAQs on the Difference Between CGST, SGST and IGST

Why is GST split into CGST, SGST and IGST?

India is a Union of States with a federal setup with the centre and the states having distinct functions to perform. The Constitution of India provides both the centre and the states the authority to levy taxes to raise revenues for them. The split of GST into CGST, SGST and IGST allows the Indian Government to collect indirect taxes under the ‘One Nation, One Tax’ policy with the dual taxation system.

Who will collect IGST in India?

The Central Government collects Integrated Goods and Services Tax (IGST) and distributes it among the centres and states under the GST Act of 2017.

How does IGST adjust with CGST and SGST?

To adjust IGST, CGST and STGST, you need to set off the IGST liability first. You can then set off CGST or SGST from the balance. You can set off either of these first, as there is no difference between CGST and SGST rates.

The GST Act of 2017 divides rates into four slab rates, i.e., 0% (nil-rated), 5%, 12%, 18% and 28%. CGST, SGST and IGST rates correspond to these rates only. For instance, if the GST rate applicable to the supply of a good or service is 12%, the CGST and SGST rates will be 6% each and the IGST rate will be 12%.