What is CGST, SGST and IGST? Simple Explanation for Freelancers

If you've recently registered for GST in India or started creating GST invoices, you've probably come across three confusing terms: CGST, SGST, and IGST. Many freelancers get confused about which one to use on their invoice and why there are three different types in the first place.

This guide breaks it down in the simplest possible way so you can fill in your invoices confidently.

Why Are There Three Types of GST?

India's GST system has three components because the tax revenue is split between the central government and state governments. Depending on whether a transaction is within one state or across states, different combinations apply.

Type	Full Form	Goes To
CGST	Central Goods and Services Tax	Central Government
SGST	State Goods and Services Tax	State Government
IGST	Integrated Goods and Services Tax	Central Government (then shared)

The Simple Rule: Same State vs Different State

The rule for which type to use on your invoice is actually very simple:

Real-World Examples for Freelancers

Example 1: Web Developer in Bangalore, Client in Bangalore

Service: Website development for ₹50,000
Both parties in Karnataka (same state)
CGST (9%) = ₹4,500
SGST (9%) = ₹4,500
Total Invoice: ₹59,000

Example 2: Graphic Designer in Delhi, Client in Chennai

Service: Logo design for ₹20,000
Delhi and Tamil Nadu are different states
IGST (18%) = ₹3,600
Total Invoice: ₹23,600

Example 3: Content Writer in Pune, Client in the UK

Service: Blog writing for ₹30,000
Client is outside India — export of services
GST = ₹0
Total Invoice: ₹30,000

What if My Client Doesn't Have a GSTIN?

Many individual clients and small businesses are not GST registered. In this case:

• You still charge GST at the applicable rate
• You use the same-state / different-state rule to determine CGST+SGST or IGST
• Leave the client's GSTIN field blank on your invoice
• The client simply cannot claim input tax credit (which only matters to registered businesses anyway)

How GST is Calculated — Step by Step

Let's say you charge ₹1,00,000 for a software project with a client in a different state, and the applicable rate is 18% IGST:

1. Taxable value (your fee): ₹1,00,000
2. IGST @ 18%: ₹18,000
3. Total invoice amount: ₹1,18,000
4. Client pays you ₹1,18,000
5. You keep ₹1,00,000 (your fee)
6. You remit ₹18,000 to the government when filing your GST return

UTGST — What's That?

You may occasionally see UTGST (Union Territory GST). This is used instead of SGST when the buyer is in a Union Territory (like Delhi, Chandigarh, Lakshadweep, etc.). It works exactly like SGST — charged at half the total GST rate alongside CGST.

Quick Reference Cheat Sheet

Situation	What to charge
Client in same state as you	CGST (9%) + SGST (9%) = 18%
Client in different state	IGST (18%)
Client in Union Territory	CGST (9%) + UTGST (9%) = 18%
Client outside India	0% (export of services)

Does InvoiceKit Handle This Automatically?

Yes! When you use InvoiceKit to create your invoice, you can enter the GST rate and the tool calculates the tax amount automatically. You just need to know whether to show it as CGST+SGST or IGST based on your client's location — and now you do.

Final Thoughts

CGST, SGST, and IGST sound complicated but the underlying rule is simple: same state means split the tax between central and state governments (CGST+SGST), different state means the central government collects it all as IGST. For international clients, no GST at all.

Once you understand this, filling in your GST invoices becomes straightforward. And with a free tool like InvoiceKit, the maths is done for you automatically.