Have you ever looked at a GST invoice and wondered what CGST, SGST, or IGST really mean? If you’re running a business in Delhi or Lucknow, understanding these terms is crucial for accurate billing and compliance. While the abbreviations may look like technical jargon, they form the foundation of India’s unified Goods and Services Tax (GST) system.
In this guide, we’ll help you understand the difference between CGST, SGST, and IGST, how they apply in real-world scenarios, and what it means for businesses in Delhi and Lucknow. By the end of this blog, you will not only know their definitions but also how to apply them correctly to avoid penalties and ensure smooth GST filing.
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What is GST?
GST (Goods and Services Tax) is a comprehensive indirect tax levied on the supply of goods and services throughout India. It replaces various indirect taxes such as VAT, service tax, excise duty, and others with a single unified tax system.
Key Features of GST:
- Applies to the entire value chain from production to consumption
- Designed as a destination-based tax
- Allows input tax credit to prevent tax-on-tax
- Streamlines taxation for businesses in states like Delhi and Lucknow.
- Mandatory for businesses availing GST Registration service in Delhi or GST Registration service in Lucknow
What is CGST?
CGST (Central Goods and Services Tax) is the portion of GST that goes to the central government. It is levied on intra-state supplies of goods and services, which means transactions occurring within the same state.
For example, if a trader in Delhi sells goods to a customer also located in Delhi, both CGST and SGST will apply to the bill. The CGST portion is collected by the central government.
Key Points about CGST:
- Levied by the Central Government
- Applicable on intra-state transactions
- Usually charged at 50 percent of the total GST rate
What is SGST?
SGST (State Goods and Services Tax) is the portion of GST that goes to the state government. It is also applicable to intra-state transactions, levied alongside CGST.
In the same example above, the trader in Delhi will charge SGST in addition to CGST, and the SGST will go to the Delhi state government. Similarly, if the transaction happens in Lucknow, SGST goes to the Uttar Pradesh government.
Key Points about SGST:
- Levied by the respective State Government
- Charged on intra-state sales along with CGST
- The combined rate of CGST and SGST equals the full applicable GST rate
What is IGST?
IGST (Integrated Goods and Services Tax) is charged on inter-state transactions or when goods are moved between two different states. It is also applicable to imports and exports.
If a seller in Lucknow sells goods to a buyer in Delhi, IGST will apply. This tax is collected by the central government and then distributed between the central and destination state government.
Key Points about IGST:
- Applicable to inter-state and cross-border transactions
- Collected by the Central Government
- Simplifies the tax system by eliminating the need for CGST and SGST separately on inter-state trades
CGST vs SGST vs IGST: Key Differences
Here’s a simple comparison to understand the core differences among the three:
| Category | CGST | SGST | IGST |
| Full Form | Central Goods & Services Tax | State Goods & Services Tax | Integrated Goods & Services Tax |
| Applicable On | Intra-state supply | Intra-state supply | Inter-state supply & imports |
| Collected By | Central Government | State Government | Central Government |
| Example in Delhi | Sale within Delhi | Sale within Delhi | Sale from Delhi to Lucknow |
| Example in Lucknow | Sale within Lucknow | Sale within Lucknow | Sale from Lucknow to Delhi |
Real-World Examples for Better Understanding
Example 1: Sale within the same state (Delhi)
- Seller and buyer both in Delhi
- GST is split as: 9% CGST + 9% SGST
Example 2: Sale between states (Lucknow to Delhi)
- Seller in Lucknow and buyer in Delhi
- GST is charged as: 18% IGST
Why Understanding This Matters for Businesses in Delhi and Lucknow
For small and medium businesses in Delhi and Lucknow, choosing the wrong tax type can lead to mismatches in filings, errors in input tax credit claims, and possible penalties. Whether you’re consulting a GST Registration firm in Delhi or a GST Registration firm in Lucknow, clarity is critical.
Common Consequences of Mistakes:
- GST filing rejections
- Legal notices and penalties
- Disruption in input tax credit
- Customer dissatisfaction due to incorrect invoices
Compliance Tips for Businesses
If your business operates in Delhi NCR or Lucknow, it’s important to ensure you’re applying the correct tax based on the location of supply and the recipient.
How to Stay Compliant:
- Always determine whether the sale is intra-state or inter-state
- Use billing software that auto-calculates CGST, SGST, and IGST
- Reconcile GST returns regularly with invoices
- Consult GST professionals for complex transactions
How FilingPool Can Help
At FilingPool, we simplify GST compliance for businesses in Delhi, Lucknow, and across India. Whether you’re registering for GST, filing returns, or managing input tax credit, we provide step-by-step assistance to avoid confusion and non-compliance.
Our Services Include:
- GST Registration in Delhi and GST Registration in Lucknow
- Expert GST Registration service in Delhi and GST Registration service in Lucknow
- GST return filing (GSTR-1, GSTR-3B, GSTR-9)
- Input Tax Credit reconciliation and corrections
- Classification of intra-state vs inter-state transactions
- Expert help from a certified GST Registration firm in Delhi and GST Registration firm in Lucknow
Frequently Asked Questions
- Is CGST and SGST applicable on all local sales in Lucknow?
Yes. All intra-state sales in Lucknow attract CGST and SGST. - Who collects IGST on inter-state sales?
IGST is collected by the Central Government and distributed later to the consuming state. - What happens if I charge CGST/SGST instead of IGST?
It may lead to incorrect GST filing and possible penalties. Always confirm the type of supply before invoicing.
Conclusion
Understanding the difference between CGST, SGST, and IGST is essential for every business in Delhi and Lucknow. Whether you’re dealing with intra-state or inter-state transactions, applying the right GST type ensures smooth compliance and happy customers.
Ready to simplify your GST returns? Contact FilingPool today for accurate filing, expert support, and peace of mind.
