The choice between CGST plus SGST and IGST comes down to one comparison: where you, the supplier, are located versus where the place of supply is. If both are in the same state, you charge CGST and SGST in equal halves; if they are in different states, you charge IGST for the full rate. Exports of services are treated as inter-state and zero-rated, so under an LUT you charge no IGST at all.
Key takeaways
- Same state (intra-state supply): CGST plus SGST, split equally; in some union territories, UTGST takes the place of SGST.
- Different states (inter-state supply): IGST at the full rate.
- The test uses the place of supply, not simply the customer's billing address, although for most business clients they coincide.
- Export of services is zero-rated; under an LUT, the invoice shows no IGST and carries the LUT wording.
- Charging the wrong type of tax is fixable, but it creates refund and reconciliation work, so get it right on the invoice.
The basic rule, in one table
| Supplier location | Place of supply | Type of supply | Tax to charge |
|---|---|---|---|
| Maharashtra | Maharashtra | Intra-state | CGST + SGST |
| Maharashtra | Karnataka | Inter-state | IGST |
| Delhi | Delhi | Intra-state | CGST + SGST (Delhi has its own SGST) |
| Maharashtra | A union territory without its own legislature | Inter-state | IGST |
| A union territory without its own legislature | Same union territory | Intra-state | CGST + UTGST |
| Anywhere in India | Outside India (export) | Treated as inter-state, zero-rated | No IGST under LUT, or IGST paid and refunded |
The rate itself does not change between the two options. If a service attracts 18%, an intra-state invoice shows 9% CGST and 9% SGST, and an inter-state invoice shows 18% IGST. Only the split and the government receiving the tax differ.
Place of supply: the part people skip
The rule compares your location with the place of supply, and for services the place of supply follows specific rules. For most business-to-business services, it is the location of the registered recipient. That is why, in everyday practice, "same state as the client" usually means CGST and SGST.
There are exceptions. Services connected with immovable property generally look to where the property is; certain event-related and performance-based services look to where they happen. If your service has a physical element, check the place of supply before you decide the tax head.
For services to clients abroad, the place of supply rules decide whether the supply is an export at all. Our guide to place of supply for export of services covers those cases in detail.
Worked examples with numbers
Pinecrest Design Studio LLP is registered in Pune, Maharashtra. Assume its services attract GST at 18% (confirm the rate for your own service).
Client in Mumbai
Pinecrest designs a brand identity for a Mumbai company for ₹2,40,000. Supplier and place of supply are both in Maharashtra, so the invoice shows CGST at 9% (₹21,600) and SGST at 9% (₹21,600), a total of ₹2,83,200.
Client in Bengaluru
The same project for a Bengaluru company, registered in Karnataka, is inter-state. The invoice shows IGST at 18%, which is ₹43,200, for the same total of ₹2,83,200. The client claims it as IGST input tax credit.
Client in London
Pinecrest designs packaging for a London brand for GBP 3,000. If all the export conditions in Section 2(6) of the IGST Act are met (supplier in India, recipient outside India, place of supply outside India, payment in convertible foreign exchange, and the two parties not merely establishments of the same person), it is an export of services and a zero-rated supply under Section 16 of the IGST Act.
Pinecrest has an LUT, Form GST RFD-11, on file, so the invoice shows no IGST and carries the line "Supply meant for export under LUT without payment of IGST". Without an LUT, it would charge IGST and claim a refund later. Our explainer on zero-rated supply covers both routes.
Common mistakes and how they happen
Using the billing address blindly
A client with its head office in Delhi may have a GST registration in Haryana and want the invoice raised on that registration. The place of supply follows the registered recipient you are invoicing, so check the GSTIN on the purchase order, not just the letterhead.
Charging CGST and SGST to an out-of-state client
This is the most frequent slip, often when a template is copied from a local client's invoice. Correcting it usually means paying the right tax and seeking a refund of the wrong one, which takes time. Ask your CA how to handle any invoice already issued with the wrong head.
Adding IGST to an export under LUT
Once you have an LUT, an export invoice should not carry IGST. Charging it anyway confuses your client and complicates your returns.
Forgetting the export is a separate world for FEMA
For exports, GST is only half the story. Covered exporters also declare the invoice on a monthly EDF with their bank under FEMA. The EDF does not change your GST treatment, and GST treatment does not replace the EDF.
Quick decision checklist
- Where is my registered place of business for this supply?
- What is the place of supply under the rules for this service?
- Same state? CGST plus SGST (or UTGST). Different state? IGST.
- Outside India? Check the export conditions, then use LUT wording or charge IGST and claim refund.
- Does the invoice show the client's GSTIN and state, or the foreign address for an export?
This is general information, not legal or tax advice. For unusual services, multiple registrations or property-linked work, confirm with your CA.
Frequently asked questions
When do I charge CGST and SGST?
When your location as supplier and the place of supply are in the same state. The applicable GST rate is split equally between CGST and SGST, for example 9% each for an 18% service.
When do I charge IGST?
When the supplier's location and the place of supply are in different states or union territories. IGST is charged at the full rate. Exports of services are also treated as inter-state supplies, but are zero-rated.
Do I charge IGST on export of services?
Not if you export under an LUT; the invoice then shows no IGST and carries the LUT wording. If you do not have an LUT, you can charge IGST and claim a refund once the export is complete.
What is UTGST?
UTGST is the union territory tax that replaces SGST for intra-state supplies within union territories that do not have their own legislature. In those cases, you charge CGST plus UTGST instead of CGST plus SGST.
What if I charged the wrong tax on an invoice?
Do not simply re-label the tax. Speak to your CA, who will usually advise paying the correct tax and claiming a refund of the tax wrongly paid, along with the right invoice corrections.
Bottom line
Compare your location with the place of supply: same state means CGST plus SGST, different states mean IGST, and exports under LUT carry neither. Our free GST invoice generator helps you lay out the right tax heads and totals on every invoice.
This guide is general information for Indian businesses, not legal or tax advice. Rules and bank processes change — confirm specifics with your AD bank or chartered accountant.