Knowledge Centre
CGST and SGST, or IGST? How to tell
Which tax applies depends on where your customer is, not what you sell. Here is the rule, and what goes wrong when it is applied by hand.
The rule
Compare your state with the place of supply, which for most goods and services is your customer’s location. Same state: the supply is intra-state and carries CGST plus SGST, each at half the total rate. Different state: it is inter-state and carries IGST at the full rate. An 18 per cent supply is either 9 per cent CGST plus 9 per cent SGST, or 18 per cent IGST. The customer pays the same either way.
Why it goes wrong
When the tax type is a dropdown on the invoice screen, it gets set once and copied forward. A Karnataka business that mostly sells locally will have CGST and SGST as the habit, and the occasional Maharashtra sale goes out with the wrong tax. It is not noticed at the time, because the total is identical.
Why it matters later
The split is what gets reported in GSTR-1 and what your customer claims as input credit. Wrong heads mean amended returns, and a customer whose credit does not reconcile.
How billkraft handles it
There is no tax-type field. The supply type is derived from your business state and the customer’s state on every invoice, and GSTR-1 reports it per invoice. You can see it working on our home page: change the customer’s state and watch the tax split change.
General information about how GST works, not tax advice. Rules change and the detail matters, so check your own position with your accountant.
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