CGST vs SGST vs IGST for construction contractors

Every new contractor has a version of this conversation with their CA in the first week of business. It goes something like: "Wait, why did we charge CGST+SGST on this invoice and IGST on that one — same client, same work?" The answer is in one phrase: place of supply.

This post is that conversation, structured.

The one rule

For construction, engineering, and AEC services in India, the place of supply is the location of the immovable property — i.e. the construction site.

From that:

• If the supplier's state of registration == site state → CGST + SGST (intrastate).
• If the supplier's state of registration ≠ site state → IGST (interstate).

That's it. Not the buyer's registered state. Not the head office. The site.

Example 1: Karnataka contractor, Karnataka site

Contractor is registered in Karnataka. Building a warehouse in Tumkur. Client is a developer registered in Maharashtra.

Place of supply: Tumkur (Karnataka). Contractor state: Karnataka. Intrastate → CGST + SGST.

The fact that the client is registered in Maharashtra doesn't matter. The client will claim ITC only against their Karnataka GST registration (which they must obtain if they want credit).

Example 2: Karnataka contractor, Tamil Nadu site

Same contractor. Different project — a factory in Chennai. Client is registered in Tamil Nadu.

Place of supply: Chennai (Tamil Nadu). Contractor state: Karnataka. Interstate → IGST.

Example 3: Karnataka contractor, site in the SEZ zone

Same contractor. Project inside a Karnataka SEZ. Client is the SEZ unit itself.

Supplies to an SEZ are zero-rated under Section 16 of the IGST Act, but only with a Letter of Undertaking (LUT). Without LUT, it's still taxed but refundable. Blueprint handles the SEZ flag on the invoice so the right treatment is applied.

How Blueprint handles this

Every invoice captures:

• Supplier GSTIN and state code.
• Buyer GSTIN and state code.
• The project's site state.

When you generate an invoice, Blueprint reads the supplier's state and the project site's state (not the buyer's head office) and auto-splits the GST into CGST+SGST or IGST. The gstType enum on the invoice (intrastate | interstate | none) records the decision for audit.

See GST billing + RA bills for the full invoice model.

The common mistake

The single most common mistake: using the buyer's registered GSTIN state instead of the site location. For goods, that might work. For construction services, it will get you a GSTR-1 mismatch and a notice.

Further reading

• TDS 194C explained
• RA bills in construction