GST for Indian SMBs: a plain-English guide to CGST, SGST, and IGST

The core rule: place of supply decides the split

If the buyer and seller are registered in the same state, the transaction is intra-state and is taxed as CGST (Central GST) plus SGST (State GST), each typically at half the applicable GST rate. If they're in different states, the transaction is inter-state and is taxed as IGST (Integrated GST) at the full rate instead.

For example, an 18% GST rate becomes 9% CGST + 9% SGST for an intra-state sale, or a single 18% IGST charge for an inter-state sale. The total tax collected is the same either way — only the split and the ledger it's recorded against changes.

Why this matters for invoicing software

An invoicing tool that doesn't know the buyer's registered state can't compute the correct split automatically, which means the business owner has to get it right manually on every invoice — a common source of compliance errors.

Dyopact determines place of supply from the customer's registered GSTIN and billing state, and computes CGST/SGST or IGST automatically before the invoice is generated.

TDS and TCS

Separately from GST, some transactions also attract TDS (Tax Deducted at Source) or TCS (Tax Collected at Source) under the Income Tax Act. These are deducted or collected in addition to GST and reported separately — they don't change the GST calculation itself, but they do change the net amount actually paid or received.