GST

How to calculate GST: formulas and examples

Updated October 2026 · 5 min read

To add GST, multiply the price by (1 + rate ÷ 100). To remove GST from a price that already includes it, divide by the same number. For an 18% rate, multiply or divide by 1.18.

Formula 1: Add GST to a price

GST amount = Price × Rate ÷ 100
Final price = Price + GST amount

Example: a service costs ₹10,000 before tax at 18%.

• GST = 10,000 × 18 ÷ 100 = ₹1,800
• Final price = 10,000 + 1,800 = ₹11,800

Formula 2: Remove GST from an inclusive price

Price before GST = Inclusive price ÷ (1 + Rate ÷ 100)

Example: you paid ₹5,900 including 18% GST.

• Price before GST = 5,900 ÷ 1.18 = ₹5,000
• GST included = 5,900 − 5,000 = ₹900

A common mistake is taking 18% of ₹5,900, which gives ₹1,062. That's wrong, because the 18% applies to the price before tax.

Quick multipliers

CGST, SGST and IGST

• Sale within the same state: GST splits equally into CGST (Centre) and SGST (state). At 18%, that's 9% + 9%. On ₹10,000: ₹900 CGST + ₹900 SGST.
• Sale to another state: the full 18% is charged as IGST. On ₹10,000: ₹1,800 IGST.

The total tax is the same either way. Only the split on the invoice changes.

For small business owners

• GST registration is required once annual turnover crosses ₹40 lakh for goods or ₹20 lakh for services. The limits are lower in some special category states.
• Registered businesses can claim input tax credit, meaning GST paid on business purchases is reduced from GST collected on sales.
• Small businesses can choose the composition scheme, which charges a low flat rate on turnover but doesn't allow input tax credit.

Rules for your specific case can be detailed, so check with a CA before filing returns.