Every GST bill shows either CGST and SGST, or IGST. Getting this wrong means your customer cannot claim the right credit and you may have to correct your returns. Here is how it works.
The three taxes
- CGST – Central GST, collected by the central government
- SGST – State GST, collected by the state government (UTGST in union territories)
- IGST – Integrated GST, collected by the centre on sales between states
The simple rule
Compare the place of supply with the state of your business:
- Same state (intra-state) → CGST + SGST, each half of the GST rate
- Different state (inter-state) → IGST at the full rate
Examples
A shop in Coimbatore sells a product with 18 % GST worth ₹1,000 (taxable value):
- To a customer in Tamil Nadu → CGST 9 % ₹90 + SGST 9 % ₹90 = ₹1,180
- To a registered buyer in Bengaluru, Karnataka, delivered there → IGST 18 % ₹180 = ₹1,180
The total is the same – only the split changes.
What is the place of supply?
For goods it is usually where the goods are delivered. For a walk-in customer buying at your counter, it is your shop's state. For services the rules are different – check with your accountant.
How Namma Billing decides
Namma Billing compares your business location's state with the customer's state and applies CGST + SGST or IGST for every line, then prints an HSN-wise tax summary on the bill. See GST billing software.
Common mistakes to avoid
- Charging CGST + SGST to an out-of-state buyer – the buyer cannot claim it as IGST credit, and you will need to correct the invoice.
- Wrong customer state – always save the state with the customer's address and GSTIN; the first two digits of a GSTIN are the state code (for example 29 for Karnataka, 33 for Tamil Nadu).
- Mixing tax rates in one line – each product should carry its own rate (5 %, 12 %, 18 % …) so the tax summary is correct.
- Ignoring cess – some goods also attract compensation cess, which is shown separately.
Input tax credit in short
The GST you pay on purchases is your input tax credit. IGST credit can be used against IGST, CGST and SGST; CGST credit against CGST and IGST; SGST credit against SGST and IGST – in the order set by the law. Recording purchases with the supplier's GSTIN in your billing software makes it easy for your accountant to match credits.
General information only, not tax advice.
Try it in your shop
Namma Billing does all of this for you. Start a free trial or call / WhatsApp +91 9019912392 for a demo.