GST glossary
CGST
Central Goods and Services Tax
CGST is the central government's share of GST on a sale within a state. It is charged together with SGST at an equal rate, so an 18% sale carries 9% CGST and 9% SGST, and it is paid to the centre.
Why it matters to your business
GST is one tax shared by the centre and the states, and CGST is the centre’s half on local sales. Your customers claim credit for the exact tax head you charge, so an invoice with the wrong split is a problem for both of you: you pay again under the right head, and they wait for a corrected invoice. Charging CGST correctly starts with the place of supply.
How it works
As of September 2026:
- Intra-state supply (you and the place of supply in the same state): CGST plus SGST, each at half the rate.
- Inter-state supply, imports, and supplies to SEZ units: IGST at the full rate, instead of CGST and SGST.
- Rates: after the rate changes from 22-09-2025, most goods and services are at 5% or 18%, with 40% on a short list of luxury and sin goods and special rates for items such as gold. CGST is half of whichever rate applies.
- CGST collected goes to your output CGST ledger; CGST paid on purchases becomes input tax credit in your input CGST ledger.
An example
You run a shop in Pune and sell goods worth ₹10,000 to a customer in Mumbai. Both are in Maharashtra, so this is an intra-state sale. At 18%:
| Amount | |
|---|---|
| Taxable value | ₹10,000 |
| CGST at 9% | ₹900 |
| SGST at 9% | ₹900 |
| Invoice total | ₹11,800 |
If the same customer were in Bengaluru, you would charge IGST of ₹1,800 instead.
Common mistakes
- Deciding the tax by the customer’s billing address when the place of supply is the delivery address in another state.
- Charging CGST and SGST on a sale to an SEZ unit, which always carries IGST or is zero-rated.
- Using CGST credit against SGST in GSTR-3B.
Questions about CGST
When is CGST charged?
When the supplier's state and the place of supply are the same, that is, on an intra-state supply. The same sale also carries SGST, or UTGST in a union territory without its own legislature.
What are the CGST rates?
Half of the GST rate on the item. Since 22-09-2025 the main GST rates are 5% and 18%, so CGST is usually 2.5% or 9%. Goods at the 40% rate carry 20% CGST.
Can I use CGST credit to pay SGST?
No. CGST credit can pay CGST and then IGST, but never SGST or UTGST. Likewise SGST credit cannot pay CGST.
What if I charged CGST and SGST where IGST was due?
You pay the correct tax, IGST, and claim a refund of the CGST and SGST wrongly paid. The customer also cannot claim credit of the wrong tax, so it is worth getting the place of supply right on the invoice.
Updated .