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There is no single percentage that divides every GST receipt between the Centre and the States. For a sale within one State, CGST and SGST are separate tax components; for an inter-State supply or an import, the Union collects IGST, which is apportioned and settled under law. The route depends on the kind of supply, and IGST credits and account transfers mean its gross collection is not simply split 50:50.
How the main GST channels differ
| Supply or charge | Initial levy or collection | How the State or UT interest is handled | What not to assume |
|---|---|---|---|
| Supply within one State | CGST and SGST are separately levied | SGST is the State component; for a Union Territory, the corresponding component is UTGST | It is not one pooled receipt later divided by a universal sharing percentage. |
| Inter-State supply or import | The Union levies and collects IGST | Statutory apportionment and settlement direct amounts to relevant Union, State or UT tax accounts | Gross IGST collection is not automatically split equally or retained entirely by the Centre. |
| GST compensation cess | A separate cess under a transitional compensation framework | Handled through its own compensation and payment arrangements | It is not the ordinary formula for sharing CGST, SGST or IGST. |
What happens to GST on a sale within one State?
India’s GST is a concurrent tax system: both the Union and State legislatures have GST powers. For an intra-State supply, the usual structure is CGST alongside SGST. The State component is a distinct tax, not a later share carved out of a single central collection. In a Union Territory, the corresponding jurisdictional component is generally UTGST rather than SGST.
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The exact tax treatment depends on how the supply is classified and the applicable rate notification. The phrase “half goes to the Centre and half to the State” is therefore an imprecise shorthand: it can obscure that two tax components are imposed and accounted for separately.
Who gets IGST on inter-State sales and imports?
For supplies in the course of inter-State trade or commerce, Article 269A of the Constitution provides that GST is levied and collected by the Government of India and apportioned between the Union and the States as Parliament provides 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, cross-utilisation of credits and transfers among central, State and Union Territory tax accounts.
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So, “the Centre collects IGST” describes who collects it initially; it does not mean the Centre keeps the whole amount as final revenue. Nor does the constitutional rule mean each inter-State transaction produces an immediate, equal cash payment to the Centre and destination State. The relevant supply, eligible tax credits and account-settlement process affect where amounts are ultimately credited.
Why IGST is not a simple 50:50 cash split
IGST is designed to work with input-tax credits across State borders. As credits are used and statutory apportionment is applied, amounts move among tax accounts. That process is different from taking the gross IGST collected on each transaction and dividing it equally at the point of sale.
The Department of Revenue’s acts-and-rules index lists Goods and Services Tax Settlement of Funds Rules 2026. The full current procedure, including any later amendments or notifications, should be checked in the operative rule text; a listing alone does not establish the details of the current settlement method.
What older material says about year-end balances
A 2018 GST Council agenda note described how an IGST account balance still unsettled at the end of a financial year was treated, distinguishing it from amounts already cross-utilised or apportioned. The note said that the balance remaining on 31 March entered the Consolidated Fund of India and was devolved under Article 270. This is a historical explanation of the approach discussed in that agenda item, not a substitute for the current settlement rules.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What the GST Council discussions do—and do not—establish
Minutes of the 54th GST Council meeting in 2024 recorded a negative IGST-account balance and officials’ discussion of historical allocation practice, including a proposal to revisit State allocation ratios. Material from the 55th meeting in 2025 continued discussion of IGST balances and compensation-cess restructuring.
Those records show that the method and balances were discussed; a Council discussion or proposal by itself does not establish that a new general allocation formula became operative law. To describe the current formula, the relevant 2026 settlement rules and any subsequent official orders need to be read.
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How compensation cess fits in
The compensation-cess framework addressed specified State revenue losses associated with the transition to GST. It is a separate track from the ordinary dual levy of CGST and SGST and from IGST apportionment. Cess receipts, compensation payments and related borrowing should not be treated as another version of a general GST-sharing ratio. The framework’s current collection, outstanding obligations and any restructuring are date-sensitive, so they require current official confirmation before being stated as present-day facts.
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