GST — Goods and Services Tax — replaced a tangle of older Indian indirect taxes (VAT, service tax, excise duty, and more) with a single tax structure in 2017. If you run a small business in India, you'll run into it constantly: pricing products, writing invoices, filing returns. Here's how it actually works.
The four GST slabs
Most goods and services in India fall into one of four rates: 5%, 12%, 18%, or 28%. A few categories — like fresh produce — are exempt entirely (0%), and a handful of luxury or "sin" goods carry an additional cess on top of 28%.
There's no simple rule for which rate applies to which product — it's set by the GST Council and published in official rate schedules. When in doubt for your specific product or service, check the current official rate rather than assuming based on a similar item, since rates do get revised.
CGST, SGST, and IGST — the same tax, split differently
This is the part that trips people up. GST isn't one tax — it's split based on where the transaction happens:
- Intra-state sale (buyer and seller in the same state): the GST rate is split evenly between CGST (Central GST, goes to the central government) and SGST (State GST, goes to the state government). An 18% rate becomes 9% CGST + 9% SGST.
- Inter-state sale (buyer and seller in different states): the full rate is charged as IGST (Integrated GST) in one line, which the central government later apportions to the destination state.
The total tax rate is identical either way — 18% is 18% — it's just accounted for differently depending on whether the sale crosses a state border.
Inclusive vs. exclusive pricing
When you're calculating GST, you're usually solving one of two problems:
Adding GST to a base price (exclusive → inclusive): if a product costs ₹1,000 before tax and the rate is 18%, the tax is ₹1,000 × 18% = ₹180, making the final price ₹1,180.
Extracting GST from a final price (inclusive → exclusive): if a product is sold for ₹1,180 and that already includes 18% GST, you can't just take 18% of ₹1,180 — that overcounts. The correct base price is ₹1,180 ÷ 1.18 = ₹1,000, and the tax portion is the difference, ₹180.
That second calculation is the one people get wrong most often, because it's tempting to apply the percentage directly to the final price instead of dividing out the markup first.
Input Tax Credit, briefly
One of GST's core design features is Input Tax Credit (ITC): a registered business can deduct the GST it paid on its own purchases (inputs) from the GST it owes on its sales (output). This is what prevents tax from compounding at every step of a supply chain the way some older tax systems did. Claiming ITC correctly has its own compliance requirements (matching invoices, filing on time, dealing with suppliers who haven't filed) that are beyond a quick calculation — but it's worth knowing the mechanism exists, since it's a major reason GST-registered businesses care about getting proper tax invoices from their suppliers.
Try it yourself
Our GST Calculator handles both directions — adding GST to a base amount or extracting it from a final price — across all four standard slabs, entirely in your browser. No data leaves your device, and there's nothing to sign up for.
If you're also working out loan payments, income tax, or other India-specific numbers, we've got calculators for EMI, income tax, and PPF too.