GST & tax
How to calculate GST
GST is calculated as a percentage of the taxable value of what you sell. If your price does not yet include tax, you multiply by the rate and add it on. If the price already includes tax, you divide the tax back out.
Both directions are shown below with rupee examples, along with how the same tax gets split into CGST and SGST or charged as IGST.
Adding GST to a price
Use this when you have priced your product or service before tax: the normal case when you quote a business customer.
GST amount = Taxable value × Rate ÷ 100
Invoice total = Taxable value + GST amount
Example. You sell consultancy worth ₹50,000 at 18%. GST = 50,000 × 18 ÷ 100 = ₹9,000. The invoice total is ₹59,000.
Removing GST from an inclusive price
Use this when the amount you have already contains tax (a GST-inclusive price): an MRP, a shop receipt, or a payment a customer made against a round figure.
Taxable value = Inclusive price ÷ (1 + Rate ÷ 100)
GST amount = Inclusive price − Taxable value
Example. A customer paid ₹5,900 inclusive of 18% GST. Taxable value = 5,900 ÷ 1.18 = ₹5,000, so the GST inside that payment is ₹900.
A common mistake is deducting 18% from ₹5,900, which gives ₹4,838: wrong, because the 18% was calculated on the smaller base, not on the total. The reverse GST calculator handles this for you, and common GST calculation mistakes covers this and four other ways the maths goes wrong in practice.
GST rates at a glance
| Rate | GST on ₹1,000 | Total | Typically applies to |
|---|---|---|---|
| 0% | ₹0 | ₹1,000 | Exempt and nil-rated essentials |
| 5% | ₹50 | ₹1,050 | Many essential goods and everyday services |
| 18% | ₹180 | ₹1,180 | Most services and general goods |
| 40% | ₹400 | ₹1,400 | Luxury and sin goods (aerated drinks, luxury cars) |
Tobacco and pan masala are the exception: they remain at the earlier 28% plus compensation cess until that transition is separately notified. Slabs and item classifications are revised from time to time by the GST Council, so always confirm the rate notified for your HSN or SAC code before issuing a tax invoice. See GST 2.0: the new GST rates explained for what changed and what moved where.
How the tax is split on the invoice
The rate you charge does not change with the customer's location, but how it is presented does. For a supply inside your own state, the rate splits into equal central and state halves. For a supply to another state, the full rate is charged as one integrated line.
| Type of supply | Lines on the invoice | Total tax |
|---|---|---|
| Intra-state (same state) | CGST ₹900 + SGST ₹900 | ₹1,800 |
| Inter-state (different state) | IGST ₹1,800 | ₹1,800 |
Which one applies is decided by place of supply, explained in CGST vs SGST vs IGST.
Getting it onto an invoice
Once you know the taxable value and tax, the invoice itself needs a few mandatory fields: your GSTIN, a consecutive invoice number, HSN or SAC codes and the tax split shown separately. Our GST invoice generator applies the rates per line and totals them for you, and how to create a GST invoice walks through each field.