GST Explained: How to Add and Remove GST

Goods and Services Tax (GST) is added to the price of most goods and services in India. Businesses often need to do two things: add GST to a price, and work backwards from a total that already includes it.

Adding GST

Multiply the price by the rate and add the result. The formula is GST = price × rate ÷ 100, and the total is price + GST.

For example, a service costs ₹10,000 before tax and the rate is 18%. GST is ₹1,800, so the customer pays ₹11,800.

Removing GST from a total

This is where mistakes happen. You cannot just take 18% off ₹11,800, because the 18% was worked out on the smaller, pre-tax price. Instead use price before GST = total × 100 ÷ (100 + rate).

From ₹11,800 at 18%: 11,800 × 100 ÷ 118 = ₹10,000. The GST part is the difference, ₹1,800. Taking 18% off ₹11,800 would give ₹2,124, which is wrong.

CGST, SGST and IGST

• For a sale within one state, GST is split equally between the central government (CGST) and the state government (SGST). At 18%, that is 9% each.
• For a sale between states, the whole amount is charged as IGST.

Common GST rates

GST is charged at 0%, 5%, 12%, 18% or 28% depending on the goods or services. Always check the official rate schedule for what you sell, because rates and classifications change.