Before July 2017, India had 17 different indirect taxes — VAT, service tax, central excise, entry tax, octroi, and more — each administered separately by central and state governments. GST (Goods and Services Tax) replaced all of them with a single unified framework. Here is how it works in practice.
The 4 GST slabs
| Slab | CGST | SGST | Typical Products |
|---|---|---|---|
| 0% | 0% | 0% | Fresh food, milk, salt, books, newspapers |
| 5% | 2.5% | 2.5% | Essential food, transport, medicines, restaurant (no AC) |
| 12% | 6% | 6% | Processed food, mobile phones, computers, textiles |
| 18% | 9% | 9% | Most services, AC restaurants, electronics, cameras |
| 28% | 14% | 14% | Luxury cars, AC units, cigarettes, aerated drinks, casinos |
CGST vs SGST vs IGST — what is the difference?
The same GST rate is split differently depending on whether the transaction is within a state or crosses state lines:
- Intra-state (seller and buyer in the same state): GST is split equally between the Central Government (CGST) and the State Government (SGST). At 18% GST: 9% CGST + 9% SGST.
- Inter-state (seller and buyer in different states): The full rate goes to the Central Government as IGST (Integrated GST), which is then shared with the destination state. At 18% GST: 18% IGST.
The customer pays the same total tax either way — only the revenue distribution between central and state governments changes.
GST-exclusive calculation (adding GST to a base price)
GST Amount = Base Price × GST Rate ÷ 100
Total Price = Base Price + GST Amount
Example: ₹10,000 laptop (18% GST)
GST Amount = ₹10,000 × 18 ÷ 100 = ₹1,800
Total Price = ₹10,000 + ₹1,800 = ₹11,800
CGST (9%) = ₹900 | SGST (9%) = ₹900 (intra-state)
IGST (18%) = ₹1,800 (inter-state)GST-inclusive calculation (extracting GST from a total price)
When a price tag already includes GST (common in retail and restaurants), use the reverse formula to extract the base amount and tax component separately:
Base Price = GST-Inclusive Price × 100 ÷ (100 + GST Rate)
GST Amount = GST-Inclusive Price − Base Price
Example: ₹1,416 restaurant bill (18% GST included)
Base Price = ₹1,416 × 100 ÷ 118 = ₹1,200
GST Amount = ₹1,416 − ₹1,200 = ₹216This is the calculation you need when reconciling invoices, filing returns, or claiming input tax credit (ITC) on purchases.
Three worked examples
| Product | Base Amount | Rate | GST | Total |
|---|---|---|---|---|
| Smartphone (Electronics) | ₹25,000 | 18% | ₹4,500 | ₹29,500 |
| Branded clothing (>₹1,000) | ₹2,500 | 12% | ₹300 | ₹2,800 |
| AC restaurant bill (inclusive) | ₹1,525.42 | 5% | ₹76.27* | ₹1,601.69 |
*5% GST on restaurant bills with AC or liquor license
Input Tax Credit (ITC)
GST is a destination-based tax with a credit mechanism: businesses can claim back the GST they paid on purchases (inputs) against the GST they collect on sales (outputs). This prevents "tax on tax" (cascading) that existed under the old VAT regime.
For ITC to apply, the supplier must have filed their GSTR-1 return and the transaction must appear in your GSTR-2A. Claiming ITC on inputs that do not match your purchase records is a common audit trigger.
Frequently asked questions
Is GST charged on exports from India? No — exports are zero-rated under GST. Exporters can claim a refund of GST paid on inputs used to produce the exported goods.
Does the category auto-fill account for exemptions? The calculator uses standard slab rates. Some products have item-level exemptions or concessional rates. Always verify the exact HSN code rate for commercial invoicing.
What is the composition scheme? Small businesses with turnover below ₹1.5 crore can opt for the composition scheme — a flat tax rate (1–6%) with no ITC, simpler compliance, and quarterly filing.
Calculate GST — CGST, SGST & IGST free →Related tools: VAT Calculator · Profit Margin Calculator · Pricing Calculator · Discount Calculator