GST explained
How to Calculate GST in India: Formulas, Examples and the 2025 Slabs
GST maths is two formulas and one decision. The formulas tell you how much tax sits on a price; the decision is whether the sale is within your state (CGST + SGST) or across a state line (IGST). This guide walks through both with rupee examples, then covers the awkward cases: prices that already include tax, discounts, and the slab changes that took effect on 22 September 2025.
Key takeaways
- Tax on a price without GST: amount × rate ÷ 100. Price with GST: amount × (100 + rate) ÷ 100.
- To pull GST out of an inclusive price: base = inclusive × 100 ÷ (100 + rate); GST = inclusive − base.
- Same state: split the GST equally into CGST and SGST (or UTGST). Different state: the whole amount is IGST.
- Since 22 September 2025 most goods and services fall in 5% or 18%, with 0% for essentials and a 40% rate for luxury and sin goods. Check the current rate for your HSN before invoicing.
The basic GST formula (price does not include tax)
When you know the price before tax, GST is a straight percentage of it. This is the "exclusive" case and it is how most B2B invoices are written.
| What you want | Formula | Example at 18% on ₹1,000 |
|---|---|---|
| GST amount | Base × rate ÷ 100 | 1,000 × 18 ÷ 100 = ₹180 |
| Invoice total | Base × (100 + rate) ÷ 100 | 1,000 × 118 ÷ 100 = ₹1,180 |
| CGST (same state) | GST ÷ 2 | ₹90 |
| SGST / UTGST (same state) | GST ÷ 2 | ₹90 |
| IGST (other state) | Whole GST | ₹180 |
The reverse formula (price already includes GST)
Retail prices, MRPs and most quotes to consumers are "inclusive": the tax is inside the number. To find the base you cannot simply take 18% off ₹1,180, because 18% of 1,180 is not 180. Divide instead.
| What you want | Formula | Example: ₹1,180 inclusive at 18% |
|---|---|---|
| Base (taxable value) | Inclusive × 100 ÷ (100 + rate) | 1,180 × 100 ÷ 118 = ₹1,000 |
| GST amount | Inclusive − base | 1,180 − 1,000 = ₹180 |
| Quick factor for 18% | Inclusive ÷ 1.18 | 1,180 ÷ 1.18 = ₹1,000 |
| Quick factor for 5% | Inclusive ÷ 1.05 | ₹525 ÷ 1.05 = ₹500 |
A common mistake on MRP items: taking 18% off ₹1,180 gives ₹967.60, not ₹1,000. Always divide by (100 + rate), never subtract the percentage.
CGST + SGST or IGST? Deciding the place of supply
GST is one tax collected in two ways. For a supply within a state, the rate is split equally between the Centre (CGST) and the State (SGST, or UTGST in a union territory). For a supply between states, or to or from a SEZ, the whole rate is charged as IGST.
For goods, the place of supply is normally where the goods are delivered. For most services to a registered business, it is the location of the recipient. Your customer’s GSTIN tells you their state: the first two digits are the state code (29 is Karnataka, 27 Maharashtra, 07 Delhi, 33 Tamil Nadu).
| Seller | Buyer / delivery | Tax charged on ₹10,000 at 18% |
|---|---|---|
| Bengaluru (29) | Mysuru (29) | CGST ₹900 + SGST ₹900 |
| Bengaluru (29) | Chennai (33) | IGST ₹1,800 |
| Bengaluru (29) | Chandigarh UT (04) | IGST ₹1,800 |
| Chandigarh (04) | Chandigarh (04) | CGST ₹900 + UTGST ₹900 |
Billing software should make this decision from the customer’s state, not from a checkbox. In TripleBill the split follows the customer’s state on the party record, and the invoice shows CGST/SGST or IGST accordingly.
GST rates in force (since 22 September 2025)
The GST Council’s September 2025 rationalisation collapsed the four main slabs into two. Most items that were at 12% moved to 5%, most items at 28% moved to 18%, and a separate 40% rate applies to a short list of luxury and sin goods such as tobacco products, pan masala and high-end vehicles. Essentials stay at 0%.
For invoices dated before 22 September 2025 the old rates (5%, 12%, 18%, 28%) apply, which is why a calculator still needs those options for corrections, credit notes and old-stock disputes.
| Rate | Typical items (illustrative; confirm by HSN) | On ₹1,000: CGST + SGST | On ₹1,000: IGST |
|---|---|---|---|
| 0% | Unbranded staples, fresh produce, milk, education and health services | ₹0 + ₹0 | ₹0 |
| 5% | Packaged foods, many household goods, most items formerly at 12% | ₹25 + ₹25 | ₹50 |
| 18% | Most services, electronics, appliances, most items formerly at 28% | ₹90 + ₹90 | ₹180 |
| 40% | Tobacco, pan masala, aerated drinks, luxury cars and similar | ₹200 + ₹200 | ₹400 |
Rates checked on 16 Sep 2026 against the CBIC rate notifications. Rate schedules change by notification; look up your HSN/SAC on cbic-gst.gov.in before finalising an invoice.
Try it: GST calculator
Enter an amount, pick a rate, and switch between "add GST" and "GST included". The calculator shows the CGST/SGST and IGST splits side by side.
GST rate
How this is calculated
GST = 1,000 × 18 ÷ 100 = ₹180.00; total = ₹1,180.00
CGST 9% = ₹90.00, SGST 9% = ₹90.00
Worked example 1: a shop bill within the state
A Bengaluru electronics shop sells a mixer grinder for ₹3,500 before tax to a walk-in customer. Mixer grinders are at 18%.
- 1GST = 3,500 × 18 ÷ 100 = ₹630.
- 2Same state, so CGST = ₹315 and SGST = ₹315.
- 3Invoice total = 3,500 + 630 = ₹4,130.
- 4On the invoice: taxable value ₹3,500.00, CGST @ 9% ₹315.00, SGST @ 9% ₹315.00, total ₹4,130.00.
Worked example 2: an inter-state B2B invoice with a discount
A Surat textile wholesaler bills a Chennai retailer ₹80,000 of fabric at 5%, with a 10% trade discount shown on the invoice.
- 1Discount = 80,000 × 10% = ₹8,000. Taxable value = ₹72,000. (A discount shown on the invoice reduces the taxable value; a discount given later needs a credit note.)
- 2GST = 72,000 × 5 ÷ 100 = ₹3,600.
- 3Different states, so IGST = ₹3,600.
- 4Invoice total = 72,000 + 3,600 = ₹75,600.
Worked example 3: backing GST out of an MRP
A pharmacy sells an item with MRP ₹236 at 18%, and needs the taxable value for its GSTR-1 B2C summary.
- 1Base = 236 × 100 ÷ 118 = ₹200.
- 2GST = 236 − 200 = ₹36 (CGST ₹18 + SGST ₹18 for a local sale).
- 3Report ₹200 as taxable value and ₹36 as tax, not ₹236 and ₹42.48.
Rounding, multiple rates and other details
- Round tax per line to two decimals and round the invoice total to the nearest rupee if you show a round-off line; the round-off is not part of the taxable value.
- Items at different rates go on separate lines with their own HSN and rate; never blend rates into one line.
- Freight or packing charged on the invoice takes the rate of the goods when it is part of a composite supply; billing it separately at 18% is a common error.
- Under reverse charge (RCM) the buyer computes and pays the same GST; the seller’s invoice shows the tax but marks it as payable on reverse charge.
- Composition dealers do not charge GST on the invoice at all; they pay a flat percentage of turnover and issue a bill of supply.
How billing software does this for you
Good GST software removes the manual maths: you set the rate and HSN once per item, mark each customer’s state, and the invoice computes CGST/SGST or IGST per line, handles inclusive prices at the counter, and rolls everything into GSTR-1 (B2B by GSTIN, B2C by state) and the GSTR-3B summary.
TripleBill does exactly this on its free plan, and also keeps the ledger entries so your output tax liability and input credit are visible in the books, not only in a report.
Frequently asked questions
What is the formula to calculate GST?+
GST = taxable value × rate ÷ 100. The invoice total is taxable value × (100 + rate) ÷ 100. For a price that already includes GST, taxable value = inclusive price × 100 ÷ (100 + rate).
How do I calculate GST on an MRP?+
Divide the MRP by (1 + rate ÷ 100). At 18%, ₹236 ÷ 1.18 = ₹200 taxable value and ₹36 GST. Do not subtract 18% from the MRP; that gives the wrong answer.
How is GST split between CGST and SGST?+
Equally. An 18% supply within a state is 9% CGST plus 9% SGST (or UTGST in a union territory). The same supply to another state is 18% IGST.
What are the GST rates in India now?+
Since 22 September 2025 the main slabs are 5% and 18%, with 0% for essentials and 40% for a short list of luxury and sin goods. The older 12% and 28% slabs apply only to supplies dated before that.
How do I calculate GST inclusive and exclusive?+
Exclusive: add rate% to the base (₹1,000 at 18% → ₹1,180). Inclusive: divide the price by (100 + rate) and multiply by 100 to find the base (₹1,180 → ₹1,000), then subtract to get the tax.
Is a discount taxed under GST?+
A discount shown on the invoice reduces the taxable value, so GST is computed on the discounted amount. A discount agreed later must be given through a credit note with GST adjusted.
How do I calculate GST for a service?+
Same formulas. Most services are at 18%; use the SAC code instead of HSN, and decide CGST/SGST vs IGST from the recipient’s state for a registered business.
About the author
Written by the TripleBill team, the people who build the billing and accounting software this site is about. We check competitor prices on their own websites on the date shown above, and we say so when our product is the weaker choice. This article is general information, not tax advice.
Stop doing GST maths by hand.
TripleBill computes CGST/SGST or IGST per line from the customer’s state and rolls it into GSTR-1 and 3B. Free plan, no card.
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