Key takeaways
- GST amount = price before tax × rate ÷ 100.
- To remove GST from an inclusive price, divide by (1 + rate ÷ 100). Do not subtract rate% of the inclusive price.
- Inside one state, split the tax equally into CGST and SGST; between states, charge it all as IGST.
GST arithmetic is simple once you know which number you start from: the price before tax, or the price including tax. Most mistakes come from mixing the two. Here are the formulas, with worked examples you can check in the GST calculator.
Adding GST to a price
When you know the price before tax (the taxable value):
GST = taxable value × rate ÷ 100
Total = taxable value + GST
Example: a service worth ₹12,500 at 18%. GST = 12,500 × 18 ÷ 100 = ₹2,250. Total = ₹14,750.
A shortcut is to multiply by (1 + rate ÷ 100): 12,500 × 1.18 = 14,750.
Removing GST from an inclusive price
When the price already includes GST, such as a shelf price or an amount a customer paid:
Taxable value = inclusive price ÷ (1 + rate ÷ 100)
GST = inclusive price − taxable value
Example: a customer paid ₹5,900 including 18% GST. Taxable value = 5,900 ÷ 1.18 = ₹5,000. GST = ₹900.
The mistake almost everyone makes once
Taking 18% of ₹5,900 gives ₹1,062, which is wrong. The 18% was charged on ₹5,000, not on ₹5,900. Always divide; never subtract a percentage of the inclusive amount.
| Inclusive price | Rate | Correct GST | Wrong “rate% of total” |
|---|---|---|---|
| ₹1,180 | 18% | ₹180 | ₹212.40 |
| ₹1,050 | 5% | ₹50 | ₹52.50 |
| ₹14,000 | 40% | ₹4,000 | ₹5,600 |
Splitting into CGST, SGST and IGST
- Same state: half the rate is CGST and half is SGST (UTGST in union territories without a legislature). At 18%, that is 9% + 9%.
- Different states: the full rate is IGST.
Example: ₹40,000 of goods at 5%, sold within Gujarat: CGST 2.5% = ₹1,000, SGST 2.5% = ₹1,000. Sold to a buyer in Maharashtra: IGST 5% = ₹2,000.
Discounts and GST
A discount shown on the invoice at the time of sale reduces the taxable value, so tax is calculated after it. On ₹10,000 with a 10% discount at 18%: taxable value ₹9,000, GST ₹1,620, total ₹10,620. Discounts given later, after the invoice, need a credit note and have their own conditions.
Which rate applies?
From 22 September 2025, most goods and services fall in two main slabs, 5% and 18%, with 40% for a short list of luxury and sin goods, plus special rates such as 3% on gold and 0.25% on rough diamonds. Many essentials are exempt. The rate is tied to the HSN or SAC code, so look up your item on the GST portal’s rate finder or ask your accountant.
Try it
The GST calculator does both directions and shows the split. When you are ready to bill, the GST invoice generator puts the same numbers on a proper invoice with the total in words.
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