GST in India has four components on a supply: CGST and SGST (or UTGST in some Union territories) when the supplier and the place of supply are in the same State, and IGST when they are in different States or the supply is an import or export. The compensation cess, a fifth levy, has been withdrawn for most goods and, as reported, for tobacco from 1 February 2026.
Facts checked: 9 October 2026. The component structure (CGST Act, SGST Acts, UTGST Act, IGST Act) and the credit utilisation order (section 49 of the CGST Act and rule 88A of the CGST Rules) are stated from the statute and have not changed; read them on cbic-gst.gov.in. The cess position rests on secondary reports of the 22 September 2025 reform and of a notification effective 1 February 2026. I could not open the notification itself, so confirm against CBIC before quoting it.
The types of GST at a glance
| Type | Full form | Applies when | Collected by |
|---|---|---|---|
| CGST | Central GST | Intra-state supply (same State) | Centre |
| SGST | State GST | Intra-state supply in a State or Union territory with a legislature | State |
| UTGST | Union Territory GST | Intra-state supply in a Union territory without a legislature | Union territory |
| IGST | Integrated GST | Inter-state supply, imports, exports and supplies to SEZ | Centre, then apportioned |
| Cess | Compensation cess | Only for specified goods, where still levied | Centre |
On an intra-state supply the rate is split equally. A 5% rate means 2.5% CGST plus 2.5% SGST or UTGST. On an inter-state supply the whole 5% is IGST.
Which Union territories charge UTGST?
UTGST applies where the territory has no legislature, such as Chandigarh and Ladakh. Union territories with a legislature, such as Delhi and Puducherry, charge SGST. Check the territory before choosing the tax head on an invoice.
How the money is shared
CGST goes to the Centre and SGST to the State where the supply is made. IGST is collected by the Centre, and the share belonging to the destination State is passed on to it when the buyer claims credit or the supply is finally consumed there. That is why a buyer's credit, not the seller's location, decides which government finally keeps the tax.
Credit utilisation order, in brief
Input tax credit is used in a fixed order:
- IGST credit: first against IGST, then CGST, then SGST or UTGST.
- CGST credit: first against CGST, then IGST. It cannot be used against SGST.
- SGST or UTGST credit: first against SGST or UTGST, then IGST. It cannot be used against CGST.
- Cess credit: only against cess.
Blocked credits under section 17(5) stay blocked regardless of head.
Status of the compensation cess
The cess was levied on luxury and sin goods to compensate States for revenue loss. As reported, it ended for most goods when the rate structure changed on 22 September 2025 to 5% and 18%, with a 40% rate for a small set of goods. Tobacco and pan masala continued until the compensation loan obligations were cleared, and a notification reported by secondary sources ends the cess on them from 1 February 2026, with separate excise and health-related levies replacing it. If your client holds old cess credit or has a pending cess liability, confirm the position for that period before filing.
Illustrative invoice
Illustrative figures, not a real transaction. A Pune consulting firm bills services worth ₹1,00,000 at 18%.
| Buyer location | Tax charged | Amount |
|---|---|---|
| Mumbai (same State) | CGST 9% + SGST 9% | ₹9,000 + ₹9,000 = ₹18,000 |
| Bengaluru (other State) | IGST 18% | ₹18,000 |
Total invoice value is ₹1,18,000 in both cases. Use the GST calculator to split any amount, and the GST tax invoice format to see which fields the invoice needs.
Suppose the firm holds ₹5,000 of IGST credit and has ₹18,000 CGST and ₹18,000 SGST payable on other sales. It must set the IGST credit first against IGST liability, and only then against CGST and SGST. Working the order wrongly shows up as a mismatch between the electronic credit ledger and GSTR-3B.
Frequently asked questions
What is the difference between CGST and SGST?
CGST is the Central Government's share on an intra-state supply and SGST is the State's share. At the same rate they are equal, and credit of one cannot be used against the other.
When is IGST charged instead of CGST and SGST?
When the supplier's location and the place of supply are in different States, and on imports and exports. The place of supply rules decide this, not where the goods are billed from.
Is compensation cess still payable?
For most goods no. Check the notification for any item you deal in, because the position is item-specific.
Can I use CGST credit to pay SGST?
No. CGST credit can be used against CGST and then IGST only. Cross-utilisation between CGST and SGST is not allowed.
To check a tax head or a rate on a live invoice, use the GST calculator and read how to verify a GSTIN.
To read the state from the first two digits of a GSTIN, use the GST state code list and GSTIN decoder.
Statutory facts on this page are checked against their sources, and the page says where it relied on secondary reporting. How we verify · Report an error