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Outbyte Driver Updater FREEFix the driver behind crashes, sound loss and screen glitchesFind Drivers →Outbyte PC Repair FREERepair Windows errors before they cause bigger problemsFix Now →India has no single percentage that divides every GST receipt between the Centre and the States. For a supply within a State, Central GST (CGST) and State GST (SGST) are separate components; within a Union Territory, the corresponding local component is generally UTGST. For an inter-State supply or an import, the Union collects Integrated GST (IGST), which is apportioned and settled under law. Credit use and account transfers mean gross IGST collections are not simply split 50:50.
How GST is shared depends on the type of supply
GST follows different channels for supplies within a State and supplies between States. The Constitution gives both Parliament and State legislatures GST law-making powers, while setting a distinct rule for inter-State GST. That is why the phrase “GST is divided between Centre and State” is too broad unless it specifies which tax and transaction it means.
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| Channel | Initial levy or collection | How the State or UT interest appears | Important distinction |
|---|---|---|---|
| Supply within a State | CGST plus SGST | SGST is a separate State tax component | It is not one pooled receipt later divided by a universal percentage. |
| Supply within a Union Territory | CGST plus UTGST, where the UTGST framework applies | UTGST is the corresponding local tax component | Do not describe UTGST as a State’s share. |
| Inter-State supply or import | IGST, collected by the Union | Apportionment and settlement route amounts to the relevant Union, State or UT tax accounts | Credits and settlement affect the flow; the gross collection is not a simple equal split. |
| Compensation cess | A separate cess under the transitional compensation framework | Handled through its compensation-fund and statutory payment arrangements | It is not the ordinary formula for sharing CGST, SGST or IGST. |
For a sale within a State, CGST and SGST are separate taxes
For an intra-State supply, the usual structure is CGST levied by the Centre alongside SGST levied by the State. A Union Territory uses UTGST for the corresponding local component where applicable. The tax components are imposed and accounted for separately; the transaction is not first charged as one undifferentiated GST amount and then divided between governments.
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This also means there is no universal “half to the Centre, half to the State” rule that describes every GST transaction. The applicable tax rates and components depend on the relevant rate notification, the place-of-supply classification and the transaction’s circumstances. A tax amount shown on a bill should be read according to its named component, not inferred from a generic sharing ratio.
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For inter-State sales and imports, the Union collects IGST
Article 269A of the Constitution provides that GST on supplies in the course of inter-State trade or commerce is levied and collected by the Government of India, then apportioned between the Union and States as provided by Parliament by law on the recommendations of the GST Council. Imports are treated as inter-State supplies for this purpose.
The IGST Act provides the statutory machinery for apportionment, input-tax-credit cross-utilisation and transfers among central, State and UT tax accounts. So “the Centre collects IGST” describes who collects it initially; it does not mean the Centre keeps the entire amount as final revenue. Equally, it is not accurate to say that a State automatically receives half of every rupee of IGST. The relevant supply, eligible credits and statutory settlement process matter.
Why IGST is not a simple cash split
IGST supports input tax credit across State borders. A registered business may use eligible credits against tax liabilities under the applicable rules, and tax-account balances are then apportioned or transferred through the legal settlement process. The movement is therefore a combination of credit use and account settlement, not necessarily an immediate division of the gross amount collected at the point of sale.
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1Scan for outdated or missing drivers - takes under a minute2Repair Windows errors before they cause bigger problems3Fix the driver behind crashes, sound loss and screen glitchesThe distinction matters when comparing a collection figure with a State’s eventual tax accounts. Gross IGST collected, amounts used as credits, transfers to tax accounts and unsettled balances are different measures. A headline collection number alone does not show how much a particular State ultimately receives.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.IGST balances and settlement rules can change
A 2018 GST Council agenda note described how amounts already cross-utilised or apportioned were treated differently from an IGST-account balance still unsettled at the end of a financial year. It said that a balance remaining on 31 March entered the Consolidated Fund of India and was devolved under Article 270. That is a historical explanation from the agenda item, not a substitute for current settlement rules.
The Department of Revenue’s acts-and-rules index lists Goods and Services Tax Settlement of Funds Rules 2026. For a current operational answer about settlement, allocation ratios or account treatment, consult the text of those rules and any later amendments or notifications; a listing alone does not establish the detail of the operative procedure.
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Compensation cess is a separate mechanism
The GST compensation framework addressed specified State revenue losses arising during GST’s transition period. Compensation cess and related payments or borrowing arrangements should not be folded into the ordinary explanation of how CGST, SGST or IGST is shared. The framework is a separate track, and claims about cess collection, outstanding obligations or restructuring need to be tied to a specific date and the relevant official material.
What GST Council discussions do—and do not—establish
The minutes of the 54th GST Council meeting recorded a negative balance in the IGST account and described historical practice for positive and negative balances. They also recorded officials discussing whether State allocation ratios should be revisited, including the possibility of using recent settlement ratios. The 55th meeting material continued discussion of IGST balances and compensation-cess restructuring.
These records show that the subject was discussed; a Council discussion or proposal is not, by itself, an enacted general formula. A claim that a new allocation ratio is now operative needs support from the applicable law, rules or an official order.
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