- Same state (your registered state = place of supply): charge CGST + SGST, each at half the GST rate.
- Different state: charge IGST at the full rate.
- In a union territory without its own legislature, SGST is replaced by UTGST.
- For goods shipped to a customer, the place of supply is normally the delivery address.
The two locations that matter
The tax type comes from comparing two places:
- Location of the supplier: the state of the GST registration you're selling from. If you have registrations in more than one state, it's the one that makes the sale.
- Place of supply: for goods, set by Section 10 of the IGST Act, 2017.
If both are in the same state, it's an intra-state supply and you charge CGST + SGST. If they're in different states, it's inter-state and you charge IGST.
Place of supply for goods you ship
Under Section 10(1)(a) of the IGST Act, when goods are moved to reach the buyer, the place of supply is where that movement ends: the delivery address. For a typical Shopify order, that's the shipping address state, not your warehouse and not the payment gateway.
There's one common twist. Under Section 10(1)(b), if a business buyer asks you to deliver to a third party (bill to one place, ship to another), the place of supply is the buyer's principal place of business. If you sell gifts shipped to someone else, or have complex B2B flows, check the treatment with your CA.
Worked example
A seller registered in Delhi sells two kurtas at ₹1,499 each (5% GST) and a wallet at ₹899 (18% GST). Taxable value is ₹2,998 + ₹899 = ₹3,897, and the GST is ₹149.90 + ₹161.82 = ₹311.72.
| Shipped to | Supply | Tax on the invoice | Total before round-off |
|---|---|---|---|
| Lajpat Nagar, Delhi | Intra-state | CGST ₹155.86 + SGST ₹155.86 | ₹4,208.72 |
| Bandra, Mumbai (Maharashtra) | Inter-state | IGST ₹311.72 | ₹4,208.72 |
The total is the same either way. Only the way the tax is split changes, and that split decides which government receives it and where your buyer can claim credit.
Odd paise: when the tax doesn't divide evenly, one half gets the extra paisa. For example, ₹233.91 splits into CGST ₹116.95 and SGST ₹116.96. Try your own numbers in the GST calculator.
Special cases
- Union territories: Chandigarh, Ladakh, Lakshadweep, Dadra and Nagar Haveli and Daman and Diu, and the Andaman and Nicobar Islands use UTGST in place of SGST. Delhi, Jammu and Kashmir and Puducherry have legislatures and use SGST.
- Exports and SEZ units: treated as inter-state, zero-rated supplies. They're either made under a Letter of Undertaking without tax or with IGST paid and refunded.
- Buyer's GSTIN: it doesn't change the tax type. A registered buyer in your own state still gets CGST + SGST.
- Cash on delivery: the payment method doesn't change the tax type either.
Mistakes that cause trouble in returns
- Using the billing state instead of the shipping state for consumer orders.
- Charging the wrong type and then "fixing" it by editing the invoice. Issue a credit note and a fresh invoice instead.
- Reporting B2C sales in GSTR-1 under the wrong place of supply, which sends the tax to the wrong state.
Questions people ask
Is IGST higher than CGST + SGST?
No. IGST is charged at the full rate, and CGST + SGST together add up to the same full rate. An 18% product carries either 18% IGST or 9% CGST + 9% SGST.
Which address decides the place of supply for an online order?
For goods shipped to the buyer, the delivery (shipping) address. If a business buyer asks you to ship to someone else, the buyer's principal place of business is used.
Does Shopify decide CGST, SGST or IGST for me?
Shopify's checkout calculation depends on how you've set up taxes. Check that your invoices show the right split for each order, whichever tool creates them.
What if I charged the wrong tax type?
Don't edit the issued invoice. Issue a credit note against it and a new invoice with the correct tax, and ask your CA how to report the correction.
This guide is general information, not tax or legal advice. GST rules and dates change; check the details for your business with your CA. Last reviewed 5 October 2026.