GST basics: CGST, SGST/UTGST and IGST explained

How the dual GST works: which tax applies on intra-state vs inter-state supplies and why place of supply decides it.

GST in India is a dual tax. On one supply, both the Centre and the State (or Union Territory) levy tax, or the Centre alone levies integrated tax.

• Intra-state supply (supplier's location and place of supply in the same State): CGST + SGST (or CGST + UTGST in a UT without legislature), charged in equal halves. For example, an 18% rate is charged as 9% CGST + 9% SGST.
• Inter-state supply (different States), imports, and supplies to/from SEZ units: IGST at the full rate.

Place of supply decides the tax type

Whether a supply is intra- or inter-state is decided by the location of the supplier and the place of supply, determined under Sections 10–13 of the IGST Act. For goods, this is generally where movement terminates for delivery to the recipient. For services, the general rule is the recipient's location if registered, with specific rules for immovable property, events, transport and others.

Why it matters for books

• Charging CGST+SGST where IGST was due (or vice versa) is not simply "adjusted". The correct tax must be paid, and a refund of the wrong tax is claimed under Section 77 of the CGST Act / Section 19 of the IGST Act.
• In Tally, set the party's State and GSTIN correctly in the ledger master so the right tax type is picked.