GST Explained: How India’s Goods and Services Tax Is Calculated

Goods and Services Tax (GST) is the single indirect tax that replaced a tangle of older taxes like VAT, service tax, and excise duty in 2017. If you run a business, raise invoices, or just want to understand your bills, knowing how GST is added and removed is genuinely useful. Here is how it works.

The GST slabs

GST is charged at different rates depending on the goods or service. The main slabs are 0%, 5%, 12%, 18%, and 28%. Everyday essentials tend to sit at 0% or 5%, most standard goods and services fall in the 12% or 18% bands, and luxury or “sin” items sit at 28%. The rate that applies is decided by the category of what you are buying or selling.

GST-exclusive vs GST-inclusive prices

This is where most confusion happens. A GST-exclusive price is the base amount before tax — you add GST on top. A GST-inclusive price already contains the tax — you need to work backwards to find how much of it is GST.

How to add GST (exclusive → inclusive)

To add GST, multiply the base amount by the rate. For example, on a base price of ₹1,000 at 18% GST, the GST is ₹1,000 × 18% = ₹180, so the final price is ₹1,180. Simple enough when you start from the pre-tax amount.

How to extract GST (inclusive → base)

When a price already includes GST, you cannot just take 18% of it. The GST portion is: inclusive price × rate ÷ (100 + rate). So for a ₹1,180 inclusive price at 18%, the GST is ₹1,180 × 18 ÷ 118 = ₹180, and the base price is ₹1,000. This is the calculation people most often get wrong by hand.

CGST, SGST, and IGST

For a sale within the same state, the GST is split equally into CGST (central) and SGST (state) — so 18% becomes 9% + 9%. For a sale between different states, a single IGST (integrated GST) of the full 18% applies instead. The total tax is the same either way; only the split differs.

To add or remove GST for any amount and rate, use our GST Calculator — enter the amount, choose the rate, and pick inclusive or exclusive to see the GST and net figures instantly.