Add GST to a price or remove GST from a total, at any rate.
Goods and Services Tax is calculated on the taxable value of a supply. The two directions people need are adding tax to a base price, and extracting the tax already contained in a total.
The reverse calculation is where mistakes happen. To strip 18% GST from an inclusive price of 1,180, you divide by 1.18 to get 1,000 — you do not take 18% of 1,180, which would give 212.40 and a wrong base of 967.60.
Adding: a service billed at 40,000 plus 18% GST.
Removing: a retail price of 2,360 inclusive of 18% GST.
| Rate | Typical categories |
|---|---|
| 0% | Fresh produce, milk, unbranded staples, books |
| 5% | Packaged food staples, economy transport, small restaurants |
| 12% | Processed foods, business-class air travel, some apparel |
| 18% | Most services, electronics, industrial goods — the largest slab |
| 28% | Luxury goods, cars, tobacco, aerated drinks, plus cess |
Rates are revised periodically by the GST Council, and classification disputes are common — the applicable rate depends on the HSN or SAC code for the specific item, not on a general category. Always confirm the current rate for your product code rather than assuming.
India splits GST by whether a supply crosses a state boundary. The total rate is the same either way; only the division changes.
Getting this split wrong on an invoice is a common compliance error. It does not change what the customer pays, but it does affect how they claim input tax credit, and correcting it after filing is troublesome.
Registered businesses can offset the GST they paid on purchases against the GST they collected on sales, so tax is effectively borne only on the value added at each stage. A manufacturer paying 18,000 GST on inputs and collecting 30,000 on sales remits the 12,000 difference.
Credit is conditional in practice: the supplier must have filed their return and the invoice must appear in your GSTR-2B, you must hold a valid tax invoice, and you must have received the goods or services. Credit is blocked entirely on certain categories, including most motor vehicles, personal consumption and goods lost or given as free samples.
Registration is mandatory above an annual turnover threshold — commonly 40 lakh for goods and 20 lakh for services, with lower thresholds in special category states — and is required regardless of turnover for inter-state suppliers and e-commerce operators. Small businesses may opt for the composition scheme, paying a flat low rate on turnover with far simpler filing, but they cannot claim input credit or collect GST from customers.
A compliant tax invoice must carry both parties' GSTIN, the HSN or SAC code, the taxable value, the rate and amount of each tax component separately, and the place of supply. Missing fields can invalidate the recipient's credit claim.
The arithmetic here works for any value-added tax. Common rates include 20% in the UK, 19% in Germany, 20% in France, 10% in Australia (where it is also called GST) and 5% in the UAE. The reverse formula is identical — divide by 1 plus the rate as a decimal.
This is a calculation aid, not tax advice. Rates, thresholds and classification rules change, and the consequences of getting them wrong fall on you. Confirm anything that will appear on a filed return with a qualified professional or the official rate finder.
Divide by one plus the rate as a decimal — for 18%, divide by 1.18. Taking 18% of the inclusive total is wrong and gives a tax figure that is too high.
They are the same total tax split differently. Supplies within a state are half CGST and half SGST; supplies across state lines are entirely IGST. The customer pays the same amount either way.
It depends on the specific HSN or SAC code, not a general category. Rates are revised periodically by the GST Council, so check the current official rate for your code rather than relying on a remembered figure.
No. Credit is blocked on categories including most motor vehicles, personal consumption, and goods lost or given away. It also requires your supplier to have filed their return so the invoice appears in your GSTR-2B.
Yes, the arithmetic is identical. Enter your local rate — 20% for the UK, 19% for Germany, 10% for Australia — and both the adding and removing calculations work the same way.