GST glossary
SGST
State Goods and Services Tax
SGST is the state government's share of GST on a sale within a state, charged at the same rate as CGST and paid to that state. In union territories without their own legislature, UTGST is charged instead of SGST.
Why it matters to your business
SGST is the state’s half of GST on local sales, and it funds the state where the goods or services are consumed. For you, it is half of every local invoice’s tax and half of the credit on local purchases. Because credit cannot move between states or between CGST and SGST, a business with several branches has to watch each GSTIN’s SGST separately.
How it works
As of September 2026:
- SGST is charged with CGST, each at half the rate, when you and the place of supply are in the same state.
- For a supply to another state, you charge IGST instead, and the centre passes the state’s share to the destination state.
- Each registration has its own ledgers. SGST collected by your Maharashtra GSTIN is paid to Maharashtra, even if your head office is elsewhere.
- SGST on purchases becomes input tax credit for the same GSTIN.
An example
Your Chennai branch sells services worth ₹10,000 at 18% to a customer in Coimbatore. Both are in Tamil Nadu, so the invoice shows ₹900 CGST and ₹900 SGST, and the total is ₹11,800. Had the branch been in Chandigarh selling to a customer in Chandigarh, it would show ₹900 CGST and ₹900 UTGST.
Common mistakes
- Charging SGST in a union territory that uses UTGST, or the reverse.
- Moving goods between your own branches in two states without an invoice. A transfer between two GSTINs is a supply and carries IGST.
- Expecting surplus SGST credit in one state to pay tax in another.
Questions about SGST
What is the difference between SGST and UTGST?
They work the same way. UTGST replaces SGST in union territories without their own legislature, such as Chandigarh, Ladakh, Lakshadweep, Andaman and Nicobar Islands, and Dadra and Nagar Haveli and Daman and Diu. Delhi, Puducherry and Jammu and Kashmir charge SGST.
What are the SGST rates?
Half of the GST rate on the item, the same as CGST. With the main GST rates at 5% and 18% since 22-09-2025, SGST is usually 2.5% or 9%.
Can I use SGST credit of one state in another state?
No. Credit belongs to the GSTIN that paid it. If you have registrations in two states, each uses its own SGST credit only.
Can SGST credit pay CGST?
No. SGST credit pays SGST first and then IGST. It can never be used against CGST.
Updated .