Goods and Services Tax (GST) replaced a patchwork of central and state taxes in India in July 2017, and today it applies to almost everything you buy โ from a restaurant bill to a freelance invoice. Yet a lot of people who deal with GST regularly, whether as small business owners, freelancers, or just careful shoppers, still find the actual arithmetic confusing. This guide walks through exactly how GST is calculated, without the jargon.
The current GST slabs
India uses a multi-tier GST structure, with the most common slabs being 5%, 12%, 18% and 28%, depending on the category of goods or service. Essential items are often taxed at the lower slabs or exempted entirely, while luxury and sin goods sit at the top of the scale. Always check the applicable rate for your specific product or service category, since rates are set item by item, not as a single flat national tax.
Adding GST to a price
If you have a base price and need to work out the final, tax-inclusive price, the formula is straightforward:
GST amount = Base price ร (GST rate / 100) Final price = Base price + GST amount
For example, a service billed at โน10,000 with 18% GST adds โน1,800 in tax, for a final invoice amount of โน11,800.
Removing GST from a price
Often you'll have the opposite problem: you know the final, GST-inclusive price (like an MRP) and need to work out what portion of it is tax and what the original base price was. That calculation isn't simply subtracting the percentage โ you have to divide first:
Base price = Final price รท (1 + GST rate / 100) GST amount = Final price โ Base price
Using the same numbers, a final price of โน11,800 at 18% GST works back to a base price of โน10,000 โ dividing by 1.18, not multiplying by 0.82, which is a common mistake.
CGST, SGST and IGST โ what's the difference?
GST isn't always shown as a single line on an invoice. For a sale within the same state (intra-state), the total GST is split equally into two components: CGST (Central GST), which goes to the central government, and SGST (State GST), which goes to the state government. Each is exactly half the total GST amount.
For a sale between two different states (inter-state), the full GST amount is instead charged as a single IGST (Integrated GST) line, which is later apportioned between the central and destination-state governments behind the scenes โ but from the buyer's perspective, it just shows as one combined tax line rather than a CGST/SGST split.
A quick worked example
Say you're billing โน25,000 for a service, intra-state, at 18% GST:
- GST amount = โน25,000 ร 18% = โน4,500
- CGST = โน2,250, SGST = โน2,250
- Final invoice total = โน29,500
If the same sale were inter-state instead, the invoice would show a single IGST line of โน4,500, with the same โน29,500 total.
Try it instantly
Rather than redoing this arithmetic by hand every time, our GST Calculator handles adding or removing GST at any of the standard slabs (or a custom rate) and shows the CGST/SGST split automatically.
This article is for general informational purposes and isn't tax or legal advice. For GST registration, filing or compliance questions specific to your business, consult a qualified chartered accountant or the official GST portal.