CGST + SGST or IGST? The place of supply decides, not your client’s address
The single most common GST invoicing mistake is choosing the tax split from the client’s billing address. It is decided by the place of supply, which is not always the same thing.
Updated 02 Jun 2026
If you are registered in Maharashtra and you invoice a customer in Karnataka, do you charge CGST plus SGST, or IGST? Most people answer by looking at the address on the invoice. That works most of the time, which is exactly what makes it dangerous — it fails in the cases that cost money.
The correct test is the place of supply. Section 7 of the IGST Act says a supply is inter-state when the supplier’s location and the place of supply are in different states or union territories. Section 8 says it is intra-state when they are in the same one. Everything follows from that single comparison.
What the split actually looks like
Once you know whether the supply is intra-state or inter-state, the arithmetic is mechanical. The total GST rate stays the same; only how it is divided changes.
| Scenario | Components | Amounts | Invoice total |
|---|---|---|---|
| Intra-state (MH → MH) | CGST 9% + SGST 9% | ₹9,000 + ₹9,000 | ₹1,18,000 |
| Inter-state (MH → KA) | IGST 18% | ₹18,000 | ₹1,18,000 |
| Intra-UT (CH → CH) | CGST 9% + UTGST 9% | ₹9,000 + ₹9,000 | ₹1,18,000 |
The customer pays the same either way. What changes is which government gets the money, and therefore which return the credit shows up in. Getting it wrong means your customer cannot claim the credit they expected, which is how these errors surface — usually as an email three months later asking for a revised invoice.
Determining the place of supply
Sections 10 to 13 of the IGST Act set the rules. The short version, for the cases most small businesses meet:
- Goods that move: the place of supply is where delivery ends. Not where the buyer is headquartered — where the goods actually land.
- Goods that do not move: where the goods are at the time of delivery.
- Services to a registered person: the recipient’s location, which in practice means the state in their GSTIN.
- Services to an unregistered person: the address on record, or the supplier’s location if you hold no address.
- Immovable property, event admission, restaurants, and passenger transport: the location of the property or the event, regardless of who is paying.
Why the invoice has a separate field for it
Rule 46 of the CGST Rules requires the place of supply to be stated on the invoice as its own particular, alongside both parties’ GSTINs. It is not derivable from the addresses, so it has to be recorded explicitly. Any invoice template that does not have a place-of-supply field cannot produce a compliant GST invoice, however good it looks.
In Invoicr the place of supply defaults to your client’s state, because that is right for most services — and then it flags a warning if you set a place of supply that differs from the state in your client’s GSTIN, since that is either a deliberate delivery elsewhere or a mistake worth catching.
Union territories: UTGST, not SGST
For an intra-state supply within a union territory without a legislature — Chandigarh, Lakshadweep, Andaman and Nicobar, Dadra and Nagar Haveli and Daman and Diu, Ladakh — UTGST replaces SGST. The rate is identical, the label is not. Delhi, Puducherry and Jammu & Kashmir have legislatures and charge SGST.
Exports and SEZ supplies
Both are zero-rated and both are treated as inter-state. An export can be made under a Letter of Undertaking with no IGST, or with payment of IGST and a refund claim, and the invoice must carry the matching endorsement. A supply to an SEZ unit or developer is zero-rated under Section 16 of the IGST Act and needs its own declaration.
The place of supply is a fact about the transaction, not a preference. Once you have it, the tax split is arithmetic.
A short checklist
- Confirm your own registered state — the first two digits of your GSTIN.
- Determine the place of supply using Sections 10–13, not the billing address.
- Same state? CGST + SGST, each at half the total rate. Different state? IGST at the full rate.
- Union territory without a legislature and intra-state? UTGST instead of SGST.
- Print the place of supply and both GSTINs on the invoice, and show each tax component separately with its own rate.
Invoicr validates structure and arithmetic, not your business facts. This is general information, not tax, accounting or legal advice — check anything consequential with your accountant.