what is cgst?

What is CGST? Full Form, Features, Rates, and Calculation

Learn what CGST is (CGST full form), how it works in India, key features, CGST rates in India, and a simple method to calculate CGST

Written by : Knowledge Centre Team

2026-02-11

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7 minutes read

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Ever noticed a GST invoice showing two separate tax lines, CGST and SGST, on a bill raised within the same state? That “split” is not random; it’s how India’s dual GST system ensures the Centre and States both receive tax from the same transaction without double-taxing the customer. The Central Goods and Services Tax is the “Central” component of GST that the Government of India levies on intra-state supplies of goods and services, along with SGST or UTGST, the State or UT component.

This guide explains what CGST is, how it works, CGST rates in India, and how to calculate it with a simple step-by-step method.

Key Takeaways

  • CGST full form is Central Goods and Services Tax, charged by the Centre on intra-state supply under GST

  • On within-state invoices, GST is usually split equally into CGST + SGST/UTGST (e.g., 18% = 9% CGST + 9% SGST)

  • CGST rates in India typically follow GST slabs (0%, 5%, 12%, 18%, 28%) plus special rates for select items

  • CGST calculation is simple: CGST = Taxable value × CGST rate ÷ 100 (with SGST computed separately on the same base)

  • Input Tax Credit (ITC) helps eligible businesses reduce net GST outflow by adjusting GST paid on purchases against GST payable on sales

What is CGST? Meaning and Background

The CGST full form is Central Goods and Services Tax. CGST is levied and collected by the Central Government on intra-state supplies of goods, services, or both under India’s GST framework, which was implemented from 1 July 2017. In practical terms, when a sale happens within the same state, GST is typically split into CGST, the Centre’s share, and SGST, the State’s share, and the CGST portion goes to the Central Government.

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How CGST Works in India?

At a high level, CGST applies when the “place of supply” and the “supplier location” are in the same state/UT, resulting in an intra-state supply under the dual GST design.

  • ​Intra-State Supply Split: When goods/services are supplied within the same state, the total GST rate is split equally into CGST and SGST/UTGST. For example, if GST is 18%, the invoice typically shows 9% as CGST and 9% as SGST.
  • Collection and Credit Flow: The supplier collects CGST from the customer on the taxable value and reports it in GST returns for that tax period. The CGST liability can be set off using the eligible input tax credit available in the electronic credit ledger, subject to utilisation rules.
  • ​Payment Through GST Ledgers: GST payment mechanics run through two ledgers: the electronic cash ledger (actual deposits) and the electronic credit ledger (eligible ITC). Section 49 of the CGST Act provides that self-assessed ITC is credited to the electronic credit ledger and may be used to pay output tax, as permitted.

Features of CGST

CGST is designed to make central taxation of domestic (within-state) trade more uniform, transparent, and credit-friendly within a unified GST system. From compliance to ITC, its structure directly shapes how invoices are issued, how tax is paid, and how credits are claimed across the supply chain.

  • ​Levied on Intra-State Supplies: CGST applies to intra-state transactions (supplies within the same state) and is charged alongside SGST/UTGST on the same invoice.
  • ​Revenue Goes to Centre: In an intra-state transaction, CGST is collected by the Central Government, while SGST is collected by the respective State Government.
  • Input Tax Credit Availability: CGST supports the input tax credit mechanism, enabling eligible businesses to reduce their output CGST liability by applying the CGST paid on purchases (subject to conditions).
  • In Line with the ​Dual GST Structure: India follows a dual GST model, where the Centre and States levy GST simultaneously on a common base for intra-state supplies: CGST for the Centre and SGST/UTGST for States/UTs.

​CGST Rates in India: Current Slabs and Structure

CGST rates in India generally mirror the overall GST slab structure, as CGST is typically half the total GST rate on intra-state supplies. So, a 5% GST slab commonly means 2.5% CGST + 2.5% SGST, and an 18% slab commonly means 9% CGST + 9% SGST.

Total GST Slab (indicative)

Typical CGST Rate on Intra-State Supply

Typical SGST Rate on Intra-State Supply

Examples (Illustrative)

0%

0%

0%

Essential items/services (examples listed include many basic food items and healthcare services)

5%

2.5%

2.5%

Many basic necessities (e.g., edible oils, sugar, domestic LPG)

12%

6%

6%

Certain goods (illustrative examples include butter/ghee/fruit juices, etc.)

18%

9%

9%

Many goods and most services (e.g., soap, toothpaste)

28%

14%

14%

Select luxury/sin goods (illustrative examples include luxury cars, cigarettes, etc.)

Special rate: 3%

1.5%

1.5%

Precious metals such as gold/silver (as listed)

Special rate: 0.25%

0.125%

0.125%

Diamonds/precious & semi-precious stones (as listed)

How CGST is Calculated: Step-by-Step Guide

CGST is calculated on the taxable value using a straightforward percentage formula.

  1. Identify the taxable value of the goods/services (value on which GST applies)
  2. Confirm the applicable total GST slab rate for the supply
  3. Divide the total GST rate by 2 to get the CGST rate for intra-state supply
  4. Apply the formula: CGST = (Taxable value × CGST rate) ÷ 100
  5. Add CGST (and SGST) to the taxable value to arrive at the invoice total

Input Tax Credit Under CGST

Input Tax Credit (ITC) under CGST allows a registered business to reduce its output tax liability by claiming credit of CGST paid on eligible purchases used in business. The CGST Act’s payment framework (Section 49) provides that self-assessed ITC is credited to the electronic credit ledger and can be used for paying output tax in the permitted manner. This mechanism helps avoid a “tax on tax” across the supply chain, so the tax is effectively borne by the final consumer rather than by each intermediary.

trivia-img

Did You Know?

IGST ITC can be used against CGST/SGST in a set utilisation order. So it’s not just having ITC, but also the set-off sequence that matters

 

Source: GST Council

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Parameter

CGST

SGST

IGST

Full form

Central Goods and Services Tax

State Goods and Services Tax

Integrated Goods and Services Tax

Applies on

Intra-state supply (within the same state/UT)

Intra-state supply (within the same state/UT)

Inter-state supply (between states/UTs)

Collected by

Central Government

State Government/UT (as applicable)

Centre (for inter-state), as described under the GST framework

Invoice visibility (typical)

Shown along with SGST on intra-state invoices

Shown along with CGST on intra-state invoices

Shown as a single IGST line on inter-state invoices

Conclusion

CGST forms an essential pillar of India’s GST structure for intra-state transactions. One of the biggest strengths of GST is its transparency, tax applicability, and intent, with the role of input tax credit clearly visible, helping businesses reduce effective tax outgo when eligible.

For personal financial planning, an important point worth noting is that GST on life insurance plans is 0%. If you aim to protect your family with pure protection cover, reviewing suitable term insurance options and locking in adequate coverage early can be prudent. Choosing a term plan that aligns with income, liabilities, and long-term goals allows families to prioritise protection at the right stage. Acting early is often the most effective decision.

Glossary

  1. Taxable Value: The financial worth of a good, service, or property that is subject to taxation by a government authority
  2. Intra-state Supply: Supply where the seller and place of supply are in the same State/UT
  3. ​Output Tax: GST charged on sales that a business is required to charge its customers for the goods and services it sells
  4. Input Tax Credit: Allows a business to reduce its GST payable by claiming credit for GST already paid on eligible business purchases
  5. ​Electronic Credit Ledger: GST portal ledger where eligible ITC is credited for utilisation against tax
glossary-img
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FAQs

CGST stands for Central Goods and Services Tax. The “central” component of GST is charged on intra-state sales and collected by the Central Government.

CGST is the GST component charged by the Centre on supplies made within the same State/UT, usually shown along with SGST/UTGST on invoices.

CGST applies when the supplier and place of supply are in the same State/UT (intra-state supply). For inter-state supply, IGST applies instead.

In India, CGST rates typically match half of the total GST slab, e.g., 5% GST = 2.5% CGST, 12% = 6%, 18% = 9%, 28% = 14%.

Compute CGST on taxable value: CGST = Taxable value × CGST rate ÷ 100. Example: ₹1,000 at 9% CGST = ₹90 CGST (plus SGST separately).

For intra-state transactions, GST is split into CGST + SGST/UTGST. For inter-state transactions, GST is charged as IGST in a single line.

ITC under CGST allows eligible businesses to reduce output tax payable by using credit of GST paid on business purchases, as reflected in the electronic credit ledger.

Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.

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