How to calculate GST: the formula, with worked examples
Add GST, remove it from an inclusive price, split it into CGST and SGST, and handle the two cases — mixed invoices and gold — where one bill carries two rates.
To add GST to a price, multiply the taxable value by the rate and divide by 100. To remove GST from a price that already includes it, multiply by the rate and divide by 100 plus the rate. At 18%, ₹10,000 without GST becomes ₹11,800 with it; ₹11,800 with GST contains ₹1,800 of tax, not ₹2,124. That second calculation is where most manual errors happen, and it is worth understanding before you use any calculator, including ours.
- Add GST: value × rate ÷ 100
- Remove GST: inclusive price × rate ÷ (100 + rate)
- At 18%: ₹10,000 → ₹11,800; ₹11,800 contains ₹1,800 of tax
- Within a state: half CGST, half SGST; between states: all IGST
- MRP already includes GST — never add it again
- Rounding: to the nearest rupee under Section 170
The basic formula: adding GST
When you know the price before tax, the GST is a straightforward percentage.
Total = taxable value + GST amount (or taxable value × (1 + rate ÷ 100))
On a laptop with a taxable value of ₹50,000 at 18%: GST is 50,000 × 18 ÷ 100 = ₹9,000, and the invoice total is ₹59,000. That is all a GST calculator does in “add” mode.
Removing GST from an inclusive price
This is the direction that goes wrong. Given a price that already includes GST, the tax inside it is not 18% of the price. The price is 118% of the taxable value, so the tax is 18 parts out of 118.
Taxable value = inclusive price × 100 ÷ (100 + rate)
On an ₹11,800 inclusive price at 18%: GST is 11,800 × 18 ÷ 118 = ₹1,800, and the taxable value is ₹10,000. Taking 18% of ₹11,800 instead gives ₹2,124 — wrong by ₹324, and wrong in the direction that overstates the credit you can claim.
A shortcut worth memorising: at 18% the tax inside an inclusive price is the price multiplied by 0.15254 (that is 18 ÷ 118). At 5% it is 0.04762; at 12% it is 0.10714; at 40% it is 0.28571.
The CGST, SGST and IGST split
Once you have the GST amount, the split is mechanical and depends only on whether the supply crosses a state line.
| Supply | How the 18% is billed | On ₹10,000 |
|---|---|---|
| Within one state | 9% CGST + 9% SGST | ₹900 + ₹900 |
| Between states | 18% IGST | ₹1,800 |
| Within a UT without a legislature | 9% CGST + 9% UTGST | ₹900 + ₹900 |
The total is identical. The split matters for compliance — tax paid under the wrong head has to be refunded and re-paid under the right one — but not for the amount. For goods, the deciding factor is where the goods are delivered, not where either party lives. The state code on each GSTIN tells you which state each party is registered in.
Worked examples at every slab
The same ₹10,000 under each rate in force in 2026, in both directions.
| Rate | Add: GST on ₹10,000 | Inclusive total | Remove: GST inside ₹10,000 | Taxable value |
|---|---|---|---|---|
| 3% | ₹300 | ₹10,300 | ₹291.26 | ₹9,708.74 |
| 5% | ₹500 | ₹10,500 | ₹476.19 | ₹9,523.81 |
| 12% | ₹1,200 | ₹11,200 | ₹1,071.43 | ₹8,928.57 |
| 18% | ₹1,800 | ₹11,800 | ₹1,525.42 | ₹8,474.58 |
| 40% | ₹4,000 | ₹14,000 | ₹2,857.14 | ₹7,142.86 |
Notice that the “remove” column is always smaller than the “add” column. That gap is the whole reason the second formula exists.
An invoice with more than one rate
Real invoices mix rates constantly — a 5% item and an 18% item on the same bill. Each line is calculated on its own, and the invoice then carries a rate-wise summary, which is also how GSTR-1 wants the figures reported.
| Line | Taxable | Rate | GST |
|---|---|---|---|
| Packaged snacks | ₹2,000 | 5% | ₹100 |
| Kitchen appliance | ₹8,000 | 18% | ₹1,440 |
| Total | ₹10,000 | ₹1,540 |
The effective rate on this invoice is 15.4%, which is not a GST rate at all — it is just the weighted result of two lines. Never apply a blended rate to a total; calculate line by line. The calculator’s invoice mode does exactly this and produces the rate-wise table.
Two rates on one item: gold and making charges
Gold jewellery is the common case where a single purchase carries two rates. The metal is taxed at 3% and the making charges at 5%, each on its own value.
| Component | Value | Rate | GST |
|---|---|---|---|
| Gold | ₹60,000 | 3% | ₹1,800 |
| Making charges | ₹6,000 | 5% | ₹300 |
| Total payable | ₹66,000 | ₹2,100 → ₹68,100 |
The effective rate is 3.18%, not 3%. The gold page has a calculator pre-set to both rates.
Calculating reverse charge
Under the reverse charge mechanism the buyer pays the GST. The arithmetic is the “add” formula applied to the supplier’s invoice value, because a foreign or unregistered supplier has not charged GST. A freelancer paying ₹5,000 to an overseas software vendor works out 5,000 × 18 ÷ 100 = ₹900, pays it in cash through the return, and claims it back as credit in the same period if eligible.
Rounding
Section 170 of the CGST Act rounds tax to the nearest rupee: 50 paise and above rounds up, below rounds down. In practice, accounting software carries two decimals on each line and rounds the invoice total. Small mismatches between your books and a supplier’s invoice almost always trace back to whether rounding happened per line or once at the end.
The mistakes that produce wrong numbers
| Mistake | What happens | Fix |
|---|---|---|
| Taking 18% of an inclusive price | Overstates tax by about 18% | Divide by 118, not 100 |
| Adding GST to the MRP | Double taxation — MRP already includes GST | Work backwards from MRP with the remove formula |
| Applying one rate to a mixed invoice | Wrong on every line | Calculate each line at its own rate |
| Splitting IGST into CGST/SGST | Tax under the wrong head | Check the place of supply first |
| Rounding each line, then rounding the total again | Off by a rupee | Round once, consistently |
Use the calculator
The TaxGamma GST calculator handles every slab including the residual 12%, switches between add and remove, splits CGST/SGST or IGST, and has an invoice mode that builds the rate-wise summary from multiple lines. It runs entirely in your browser and sends nothing to a server. If you need the rate for a specific product first, the rate finder covers 31 categories with HSN codes.
Common questions
Multiply the taxable value by the rate and divide by 100. On ₹10,000 at 18%, GST is ₹1,800 and the total is ₹11,800.
Multiply the inclusive price by the rate and divide by 100 plus the rate. On ₹11,800 at 18%, GST is 11,800 x 18 / 118 = ₹1,800. Do not take 18% of ₹11,800; that gives ₹2,124, which is wrong.
Each is half the GST rate. At 18%, CGST is 9% and SGST is 9% of the taxable value. They apply only to supplies within one state; supplies between states attract the full 18% as IGST instead.
Apply 3% to the gold value and 5% to the making charges separately, then add. On ₹60,000 of gold and ₹6,000 making charges, GST is ₹1,800 plus ₹300, a total of ₹2,100.
Yes. The maximum retail price printed on a pack already includes GST, so no tax is added at the till. To find the tax inside an MRP, use the remove formula.
Section 170 of the CGST Act rounds tax to the nearest rupee. Most software carries two decimals per line and rounds the invoice total once.
₹180, making the total ₹1,180. If ₹1,000 already includes 18% GST, the tax inside it is ₹152.54.
- Central Board of Indirect Taxes and Customs (CBIC) — CGST Act, rules and rate notifications
- GST Council — meeting decisions and press releases, including the 56th meeting of 3 September 2025
Verified against these sources on 25 September 2026. Rates cited are those in force from 22 September 2025 under the GST Council’s 56th-meeting decisions.