One rule decides the split
GST splits into three components — CGST, SGST and IGST — but which ones apply to a sale comes down to a single question: is the place of supply in the same state as your registered business, or a different one?
Same state: you charge CGST and SGST, split evenly, both going to the same total tax rate. Different state: you charge IGST instead, at the same overall rate, collected once and settled between states by the government.
It's not about your business type
A common misconception is that CGST/SGST vs IGST depends on what you sell, or how big your business is. It doesn't — a one-person trading firm and a large manufacturer follow the exact same rule, based purely on where the buyer is.
The place of supply is usually the customer's billing or shipping state — for most small businesses, wherever you're delivering the goods or providing the service determines the answer.
Selling to a walk-in customer with no GSTIN? The place of supply is usually your own state's local delivery address, so it defaults to CGST+SGST.
LedgrBook handles this automatically. The parts of this guide your bills already know.
See how →Where businesses get it wrong
The most frequent mistake is charging CGST+SGST on an inter-state sale out of habit, especially when a business mostly serves local customers and occasionally ships out of state without adjusting the invoice.
Since the total tax rate is identical either way, the error rarely shows up as a wrong total — it shows up later, as a GSTR-1 mismatch or an input credit rejection for the customer.
General information, not professional tax advice — confirm specifics with your CA.
