CGST + SGST or IGST: the place of supply decides
Every taxable supply has a location of the supplier and a place of supply. For goods that are moved, the place of supply is generally where the movement ends - where the goods are delivered.
- Intra-state (same state): CGST and SGST, each half of the rate - for example 2.5% + 2.5% for a 5% item.
- Inter-state (different states): IGST at the full rate - 5% for the same item.
The total tax is the same; what changes is which government it goes to, and which return and input-tax-credit ledgers it flows through. Getting the split wrong is a common source of mismatches in returns.
The GSTIN
Every registration has a 15-character GST Identification Number. The first two digits are the state code, the next ten are the business's PAN, then an entity number, the letter Z by default, and a final check digit. A system can validate the format and the check digit before an invoice is issued - catching typing mistakes that would otherwise surface as credit mismatches for your customer.
The September 2025 rate changes
With effect from 22 September 2025, the GST Council's rate rationalisation moved most goods to two main slabs, 5% and 18%, with 40% for a small set of goods. For pharmaceuticals, most medicines (HSN 3004) moved from 12% to 5%. Rates are set by notification (Notification No. 9/2025-Central Tax (Rate) for the central rates), and individual items can differ - check each product's HSN code against the current schedule rather than memory.
Where errors usually come from
- A customer's address or state entered wrongly, so the intra/inter-state decision is wrong.
- A plant or warehouse with the wrong state in the system - every sale from it is then taxed wrongly.
- Old rates left on product master data after a rate change.
- Invalid GSTINs on customer and supplier records.
- Tax calculated in spreadsheets outside the books, so the ledger and the return disagree.
What an ERP should do for you
- Choose CGST + SGST or IGST from the supplier's and the customer's states, on every line.
- Hold the rate on the product's tax category, so a rate change is made once.
- Validate GSTIN format and check digit on every partner.
- Recalculate the tax on an open document if an address is corrected.
- Post tax to the right ledgers from the invoice itself, so the books and the return agree.
This article is general information, not tax advice. Rates and rules change by notification; confirm with the current notifications on the CBIC website and with your tax adviser.