There are only two GST calculations. Everything else is a variation on them.
- You have a price without GST and need to add it.
- You have a price with GST included and need to extract it.
Adding GST to a base price
GST amount = base amount x rate Total = base amount + GST amount
Example: base Rs 10,000 at 18%.
- GST = 10,000 x 0.18 = Rs 1,800
- Total = Rs 11,800
If the supply is intra-state, that Rs 1,800 shows as Rs 900 CGST plus Rs 900 SGST. If inter-state, it shows as Rs 1,800 IGST. The arithmetic is the same.
Extracting GST from an inclusive price
This is where mistakes happen, because people subtract the rate instead of dividing.
Base amount = inclusive amount / (1 + rate) GST amount = inclusive amount - base amount
Example: inclusive Rs 11,800 at 18%.
- Base = 11,800 / 1.18 = Rs 10,000
- GST = 11,800 - 10,000 = Rs 1,800
The wrong method — taking 18% of Rs 11,800, which is Rs 2,124 — overstates the tax by Rs 324. The percentage applies to the base, not to the total.
A useful shortcut: the GST portion of an inclusive price is inclusive x rate / (100 + rate). For 18%, that is inclusive x 18 / 118.
Quick divisors for extraction
- 5% — divide by 1.05
- 12% — divide by 1.12
- 18% — divide by 1.18
- 28% — divide by 1.28
Calculating on a full invoice
Real invoices have more than one line. The order of operations matters:
- Compute the taxable value for each line: quantity x unit price, less any discount given at the time of supply and shown on the invoice.
- Apply the rate applicable to that line's classification. Different lines can carry different rates.
- Total the tax by rate and by component.
- Apply rounding at the end, not line by line, and follow a consistent rounding convention.
Things that change the taxable value
- Discounts shown on the invoice and agreed at or before the time of supply generally reduce taxable value. Post-supply discounts have their own conditions.
- Freight, packing and incidental charges charged by the supplier usually form part of the taxable value rather than sitting outside it.
- Cess, where applicable, is computed separately and added.
Common errors
Subtracting the percentage from an inclusive amount. The most frequent error by a distance.
Applying one rate to a mixed invoice. Lines with different classifications can attract different rates.
Rounding each line and then totalling. Small differences accumulate and cause reconciliation mismatches.
Assuming the rate. Confirm the rate that attaches to the classification rather than using the one you usually see.
Forgetting the split. The total is the same, but showing IGST where CGST and SGST belong is still an error on the document.
Checking a supplier's arithmetic
Take the taxable value on the invoice, multiply by the stated rate, and compare with the tax shown. A difference of a rupee or two is rounding. Anything more deserves a query, because it usually indicates either a rate applied inconsistently or a taxable value that does not match the line items.
Where to go next
- Read GST inclusive vs GST exclusive pricing.
- Read CGST, SGST and IGST explained.
- Read GST rates in India.
- Use the GST calculator to do it instantly.