CGST

CGST stands for Central Goods and Services Tax. It is the share of GST that goes to the Central Government when a sale of goods or services happens within the same state. In India, GST is a dual tax system, meaning both the Central Government and the State Government collect tax on every intra-state transaction. The central government's share is CGST, and the state government's share is SGST. Both are always equal in rate and are shown as separate line items on your invoice. CGST was introduced on 1st July 2017 under the CGST Act 2017 and replaced earlier central taxes like central excise duty, service tax, and countervailing duty.

Quick reference

Full form	Central Goods and Services Tax
Collected by	Central Government of India
Applicable on	Intra-state supply of goods and services
Always paired with	SGST (State Goods and Services Tax)
Rate	Always half of the total GST rate
Governed by	CGST Act 2017
ITC on CGST	Can be used against CGST or IGST liability
Not applicable when	Supply is between two different states (IGST applies instead)

How CGST works

When you sell goods or services to a buyer in the same state as your business, the GST on that sale is split equally between CGST and SGST. Here is how it flows:

1. You identify the transaction is intra-state. A seller in Bengaluru supplies services to a buyer also in Bengaluru. Both are in Karnataka. This is an intra-state supply.

2. You apply the total GST rate. The service attracts 18% GST. This total rate is split into 9% CGST and 9% SGST.

3. You show both on your invoice. Your GST invoice must display CGST and SGST as separate line items. You cannot combine them into a single "GST" figure.

4. You collect both from your buyer. The buyer pays you the full amount including both CGST and SGST. You collect both on behalf of the government.

5. You remit them separately. In your GSTR-3B, CGST and SGST are reported and paid separately. CGST goes to the Central Government and SGST goes to the Karnataka Government.

6. The buyer claims ITC separately. The buyer who is GST-registered can claim the CGST paid as CGST Input Tax Credit and the SGST paid as SGST Input Tax Credit.

CGST example for Indian businesses

Rahul runs a printing business in Chennai, Tamil Nadu. A local school in Chennai orders printed materials worth Rs. 50,000. Since both Rahul and the school are in Tamil Nadu, this is an intra-state supply.

The GST rate on printing services is 12%:

• Taxable value: Rs. 50,000
• CGST at 6%: Rs. 3,000 (goes to Central Government)
• SGST at 6%: Rs. 3,000 (goes to Tamil Nadu Government)
• Total invoice value: Rs. 56,000

Rahul's invoice shows both CGST and SGST as separate lines. He collects Rs. 6,000 total GST from the school and remits Rs. 3,000 each to the Centre and State through his monthly GSTR-3B filing.

If instead Rahul had supplied these materials to a school in Puducherry, the supply would become inter-state. In that case, IGST at 12% would apply, no CGST or SGST would appear on the invoice, and Rahul would charge Rs. 6,000 as IGST on a Rs. 50,000 taxable value.

CGST rates in India

The CGST rate is always exactly half of the total GST rate applicable on a product or service. Following the GST rate rationalisation effective 22nd September 2025 from the 56th GST Council Meeting, the main GST rate slabs are:

Total GST rate	CGST rate	SGST rate	Applicable to
0%	0%	0%	Exempt goods and services
5%	2.5%	2.5%	Essential items, certain food products
18%	9%	9%	Most services, electronics, standard goods
40%	20%	20%	Luxury and sin goods

The earlier 12% and 28% GST slabs were largely removed under the September 2025 reforms, simplifying the overall structure. Always verify the current applicable rate for your specific goods or services on the GST portal before billing.

CGST vs SGST vs IGST

This is one of the most searched topics related to GST in India. Here is how the three components differ:

	CGST	SGST	IGST
Full form	Central Goods and Services Tax	State Goods and Services Tax	Integrated Goods and Services Tax
Collected by	Central Government	State Government	Central Government
When it applies	Intra-state supply	Intra-state supply	Inter-state supply
Appears with	SGST	CGST	Alone, no CGST or SGST
Rate	Half of total GST rate	Half of total GST rate	Equal to full GST rate
ITC usage	Against CGST or IGST	Against SGST or IGST	Against IGST, then CGST, then SGST

Simple rule to remember: If your seller and buyer are in the same state, you charge CGST plus SGST. If they are in different states, you charge IGST only. You never charge all three on the same invoice.

How CGST Input Tax Credit works

A GST-registered buyer who purchases goods or services from you can claim the CGST they paid as Input Tax Credit. The rules for using CGST ITC are:

• CGST ITC must first be used to offset your CGST liability
• Any remaining CGST ITC can then be used to offset your IGST liability
• CGST ITC cannot be used to offset SGST liability

For example, if a trader has Rs. 5,000 CGST ITC from purchases and Rs. 8,000 CGST liability from sales in the same month, they pay only Rs. 3,000 CGST in cash and use the Rs. 5,000 ITC to cover the rest. This chain of ITC is what eliminates the cascading effect of taxes that existed before GST.

How CGST appears on your JetInvoice invoice

When you create a GST invoice in JetInvoice and your buyer is in the same state as your business, JetInvoice automatically applies CGST and SGST at equal rates. The invoice will show:

• CGST: [rate]% on Rs. [taxable value]
• SGST: [rate]% on Rs. [taxable value]

If your buyer is in a different state, JetInvoice applies IGST at the full rate instead and removes the CGST and SGST lines. You do not need to calculate this yourself. JetInvoice detects the buyer's state from their GSTIN and applies the correct tax split automatically.

Common CGST mistakes Indian businesses make

• Charging IGST on an intra-state sale. If your buyer is in the same state, you must charge CGST and SGST, not IGST. Charging IGST on an intra-state transaction creates a GST mismatch that can be flagged during scrutiny.

• Charging CGST and SGST on an inter-state sale. If your buyer is in a different state, IGST applies, not CGST and SGST. Many small businesses do not verify the buyer's state and apply the wrong tax type.

• Not entering the buyer's GSTIN correctly. The system that determines whether to apply CGST plus SGST or IGST relies on the state code in the buyer's GSTIN. If the GSTIN is wrong, the wrong tax type gets applied and your GSTR-1 will show a mismatch.

• Trying to use CGST ITC against SGST liability. CGST and SGST ITC cannot be used interchangeably. CGST ITC can only offset CGST or IGST, and SGST ITC can only offset SGST or IGST.

Frequently asked questions

What is CGST in simple terms?

CGST is the Central Government's share of GST on sales that happen within the same state. When you sell something to a buyer in your own state, the GST is split into two equal parts: CGST goes to the Central Government and SGST goes to the State Government. The buyer pays both as part of the invoice total.

What is the CGST rate in India?

The CGST rate is always half of the total GST rate applicable on the goods or services. Following the September 2025 reforms, the main rates are 0%, 2.5%, 9%, and 20% for CGST, corresponding to total GST rates of 0%, 5%, 18%, and 40% respectively.

When does CGST apply instead of IGST?

CGST applies when the supplier and the buyer are in the same state. If the supplier is in Mumbai and the buyer is also in Mumbai or anywhere else in Maharashtra, CGST and SGST apply. If the buyer is in a different state such as Delhi or Gujarat, IGST applies instead of CGST and SGST.

Can CGST ITC be used to pay SGST?

No. CGST Input Tax Credit can only be used to offset CGST liability first, and then IGST liability if any CGST ITC remains. It cannot be used to offset SGST liability. Similarly, SGST ITC cannot offset CGST liability.

Does CGST apply to exports?

No. Exports are zero-rated under GST. When you export goods or services from India, neither CGST nor SGST nor IGST is charged to the foreign buyer. You can either export under a Letter of Undertaking without paying any tax, or pay IGST and claim a refund afterward.

Related terms

SGST · IGST · GST Invoice · Input Tax Credit · GSTR-3B · Tax Invoice · HSN Code

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