CGST and SGST are the two parts of GST on a supply that stays inside one state. CGST is the Centre's share. SGST is the state's share. On an 18% supply they are usually 9% each. A supply that crosses a state border is charged as IGST, not as CGST plus SGST.
Difference between CGST and SGST
| Feature | CGST | SGST |
|---|---|---|
| Meaning | The Union's GST on a supply inside one state | The state's GST on the same supply |
| Collected by | Central government | The state government |
| Rate | Usually half the GST rate | Usually half the GST rate |
| Credit | CGST credit can pay CGST or IGST | SGST credit can pay SGST or IGST, not CGST |
| Law | Central GST Act, 2017 | The state's GST Act, 2017 |
| Council | Rates are set with the states in the GST Council | States together hold two-thirds of the weighted vote |
At a glance
Who receives it
The Centre
The state where the supply happens
Share of the rate
Usually half, such as 9% of an 18% rate
Usually half, such as 9% of an 18% rate
Where the money goes
Consolidated Fund of India
The state's Consolidated Fund
Cross-state sale
Replaced by IGST
Replaced by IGST
Example
A cafe bill in Bengaluru
A filter coffee and a snack come to ₹500 before tax. At 18% GST the receipt shows ₹45 CGST and ₹45 SGST, not one ₹90 line. The ₹45 CGST goes to the Union. The ₹45 SGST goes to Karnataka. The cafe can claim credit on GST it paid on beans and milk, but CGST credit cannot be used to pay an SGST bill. The two credits stay in separate compartments. IGST is the bridge when goods move between states. The same meal billed from Bengaluru to Chennai is a single 18% IGST line.
What this means for the exam
Inside one state the bill splits into CGST and SGST. Across states the bill is IGST. CGST credit cannot pay an SGST liability.
CGST
CGST is the Centre's goods and services tax on a supply that does not leave the state. On an 18% intra-state bill it is usually 9%. The money goes to the Consolidated Fund of India. Credit of CGST can be used against later CGST or against IGST. It cannot be used to pay SGST.
Article 246A lets both Parliament and the state legislatures tax goods and services. The GST Council under Article 279A sets the rates. The Centre has one-third of the weighted votes. The states together have two-thirds. A decision needs three-fourths of the weighted votes, so neither side can decide alone.
SGST
SGST is the state's matching share on the same intra-state supply. On that 18% bill it is the other 9%, and it goes to the state's Consolidated Fund. The cafe in Bengaluru pays Karnataka, not a neighbouring state. SGST credit can meet later SGST or IGST. It cannot meet a CGST liability.
When the same goods move from Bengaluru to Chennai, CGST and SGST drop off the invoice. The buyer pays IGST at the full rate. The Centre collects IGST and settles the destination state's share. IGST is not a third tax stacked on top of CGST and SGST. It stands in for both on an inter-state supply and on imports.
Key takeaway
On a sale inside one state, CGST and SGST split the rate. CGST goes to the Centre and SGST goes to the state. Their credits cannot be set off against each other.
Difference between CGST and SGST FAQs
What is CGST?
CGST is the Centre's GST on a supply inside one state. It is usually half the GST rate, and the money goes to the Consolidated Fund of India.
What is SGST?
SGST is the state's GST on a supply inside that state. It is usually the other half of the rate, and the money goes to the state's Consolidated Fund.
What is the main difference between CGST and SGST?
Both are charged on the same intra-state supply, usually at half the rate each. CGST is collected for the Centre. SGST is collected for the state. Their input credits cannot be set off against each other.
Can CGST credit be used to pay SGST?
No. CGST credit can pay CGST or IGST. SGST credit can pay SGST or IGST. The two cannot be crossed.
What happens to CGST and SGST on a sale across states?
They are not charged. The invoice shows IGST at the full rate. The Centre collects it and settles the destination state.
How does the GST Council vote?
The Council is under Article 279A. The Centre has one-third of the weighted votes and the states together have two-thirds. A decision needs three-fourths of those votes.
PYQ linkage
The GST Council is constituted under which Article of the Constitution?