GST Explained: CGST, SGST and IGST in Simple Terms
Goods and Services Tax (GST) appears on almost every bill. The rate is only part of the story: the tax is split into CGST, SGST or IGST depending on where the sale happens. You can test any amount in the GST Calculator as you read.
Key takeaways
- Within one state, GST is split equally into CGST (Centre) and SGST (state).
- On a sale to another state, the whole amount is IGST. The total tax is the same either way.
- To add GST: price × rate ÷ 100. To remove it from an inclusive price: total × 100 ÷ (100 + rate).
CGST, SGST and IGST
- CGST (Central GST) goes to the Centre.
- SGST (State GST) goes to the state where the sale takes place.
- IGST (Integrated GST) is charged when goods or services move from one state to another.
For a sale within the same state, the GST rate is split equally. At 18%, that is 9% CGST and 9% SGST. For a sale to another state, the full 18% is IGST. The customer pays the same total either way.
How to add GST to a price
GST = Price × Rate ÷ 100
Example: a service costs ₹10,000 before tax at 18% GST. GST = 10,000 × 18 ÷ 100 = ₹1,800, so the total is ₹11,800. Within a state this is ₹900 CGST plus ₹900 SGST. To another state it is ₹1,800 IGST.
How to remove GST from an inclusive price
Price before GST = Total × 100 ÷ (100 + Rate)
Example: a bill of ₹11,800 includes 18% GST. Price before GST = 11,800 × 100 ÷ 118 = ₹10,000, and the GST inside it is ₹1,800. A common mistake is to subtract 18% from ₹11,800, which gives ₹9,676 and is wrong, because the 18% was charged on the smaller base price.
GST rates in India
The GST Council's reform, often called GST 2.0, came into force on 22 September 2025. It replaced the old 12% and 28% slabs with a simpler structure:
- 0% (exempt): fresh food, milk, Indian breads, individual life and health insurance.
- 5%: everyday essentials, medicines and medical devices, many food products.
- 18%: most goods and services, including small cars, electronics and most professional services.
- 40%: luxury and sin goods, such as large cars and gambling-related services.
- 3% and 0.25%: special rates for gold and jewellery, and rough diamonds.
Rates depend on the exact HSN or SAC code of a product or service. Always check the official rate for your item on the CBIC GST portal before you invoice.
Who needs to register?
Businesses selling goods need to register if yearly turnover is over ₹40 lakh (₹20 lakh in some states), and service providers over ₹20 lakh (₹10 lakh in some states). Some businesses, such as online sellers, must register whatever their turnover. Thresholds can change, so check the latest rules.
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Frequently asked questions
What is the difference between CGST, SGST and IGST?
CGST and SGST are charged together on sales within one state, each at half the GST rate. IGST is charged on sales from one state to another, at the full rate. The total tax is the same.
How do I remove 18% GST from a price?
Divide the GST-inclusive amount by 1.18. For example, ₹1,180 ÷ 1.18 = ₹1,000, so the GST inside it is ₹180.
What happened to the 12% and 28% GST slabs?
They were removed on 22 September 2025. Most items that were at 12% moved to 5%, and most items at 28% moved to 18%. Luxury and sin goods moved to the new 40% rate.
Who needs to register for GST?
Businesses selling goods need to register if their yearly turnover is over ₹40 lakh (₹20 lakh in some states), and service providers over ₹20 lakh (₹10 lakh in some states). Some businesses, such as online sellers, must register whatever their turnover.