The one rule to remember
| Your state vs place of supply | Type of supply | Tax on the invoice | At 18% GST |
|---|---|---|---|
| Same state | Intra-state | CGST + SGST | 9% + 9% |
| Same Union Territory without legislature | Intra-UT | CGST + UTGST | 9% + 9% |
| Different state or UT | Inter-state | IGST | 18% |
The total tax is the same either way. What changes is which government receives it: CGST goes to the Centre, SGST/UTGST to the state or UT, and IGST to the Centre, which settles the state's share.
What is the place of supply?
For goods, it's generally where the goods are delivered. For most services to a registered business, it's the customer's registered location (their GSTIN state). For services to an unregistered customer, it's generally their address on record, otherwise your location. Your invoice should show the place of supply, with the state name, for inter-state supplies.
Worked examples (taxable value ₹1,00,000 at 18%)
1. Chennai seller → Chennai customer
Same state (Tamil Nadu). CGST 9% = ₹9,000, SGST 9% = ₹9,000. Total ₹1,18,000.
2. Chennai seller → Bengaluru customer (GSTIN in Karnataka)
Different states. IGST 18% = ₹18,000. Total ₹1,18,000. Place of supply: Karnataka.
3. Delhi seller → Chandigarh customer
Chandigarh is a Union Territory without a legislature, but this is still a supply from Delhi to a different territory, so it's inter-state: IGST 18%.
4. Chandigarh seller → Chandigarh customer
Within the same UT: CGST 9% + UTGST 9%.
Common mistakes
- Charging CGST + SGST because the customer's shipping address is local, when the place of supply rule points elsewhere.
- Splitting 18% IGST into 9% + 9% on an inter-state invoice.
- Leaving out the place of supply on inter-state invoices.
- Paying the wrong tax head. If you charged IGST when it should have been CGST + SGST (or the other way round), the fix is to pay the correct tax and claim a refund of the wrong one, which is slow. It's far easier to get it right on the invoice.
Let the software decide
CappsAI Studio reads your state from your GSTIN and the customer's state from theirs (or their address), sets the place of supply, and splits GST into CGST + SGST or IGST automatically on every quote and invoice. Totals are calculated with exact decimal maths, never by AI.