The type of GST charged — CGST+SGST or IGST — depends entirely on whether the supply is intrastate (within the same state) or interstate (between different states). Getting this wrong means you charge the wrong tax and face penalties.
Intrastate vs Interstate: Quick Comparison
| Aspect | Intrastate Supply | Interstate Supply |
|---|---|---|
| Buyer & Seller location | Same state | Different states |
| Tax applied | CGST + SGST (50/50 split) | IGST (full rate) |
| Who collects | Both Central & State Govt | Central Govt only |
| Example (18% GST on ₹10,000) | CGST ₹900 + SGST ₹900 | IGST ₹1,800 |
| ITC usage by buyer | CGST credit offset CGST; SGST offset SGST | IGST credit offsets IGST/CGST/SGST |
Key Rules for Place of Supply
- Goods: place of supply = state where goods are delivered
- Services (B2B): place of supply = location of registered recipient
- Services (B2C): place of supply = location where service is performed
- Online services: place of supply = location of recipient
- Immovable property services: place of supply = where property is located
Important
If you charge CGST+SGST on an interstate supply (or IGST on an intrastate supply), the error must be corrected via a credit note and fresh correct invoice. Buyers cannot claim ITC on incorrectly taxed invoices.