Quick answer: to add GST, multiply the price by the rate and divide by 100: ₹10,000 at 18% has ₹1,800 GST, so the invoice total is ₹11,800. To take GST out of an inclusive price, divide by (1 + rate/100): ₹11,800 ÷ 1.18 = ₹10,000, and the tax inside it is ₹1,800. Within your own state, split the tax into equal CGST and SGST. Across states, charge it all as IGST.
If you just want the number, use our free GST calculator. If you want to understand what sits behind it, and avoid the mistakes that show up during reconciliation, read on.
The two GST formulas you actually need
Almost every GST question on a sales counter or in an accounts team comes down to one of two situations.
1. The price does not include GST
This is how most B2B quotations work. You agree a taxable value and add tax on top.
- GST amount = taxable value × rate ÷ 100
- Invoice total = taxable value + GST amount
A web design agency quotes ₹48,000 for a project. The service attracts 18% GST, so the tax is 48,000 × 18 ÷ 100 = ₹8,640 and the client pays ₹56,640.
2. The price already includes GST
Retail prices, MRPs, restaurant menus and many consumer quotes are "inclusive". Here you have to pull the tax out.
- Taxable value = inclusive price × 100 ÷ (100 + rate)
- GST amount = inclusive price − taxable value
A shop sells a mixer grinder for ₹4,720 inclusive of 18% GST. The taxable value is 4,720 × 100 ÷ 118 = ₹4,000 and the GST is ₹720.
The most common error is to take 18% of ₹4,720 and call it ₹849.60. That charges tax on tax. Always divide, never multiply, when the price already includes GST.
Beautiful GST invoices with your signature and stamp, quotations to credit notes, inventory, UPI collection and 30+ reports.
Start free See the demoQuick reference: dividing factors by rate
| GST rate | Add GST: multiply by | Remove GST: divide by | Tax share of an inclusive price |
|---|---|---|---|
| 3% | 1.03 | 1.03 | 2.91% |
| 5% | 1.05 | 1.05 | 4.76% |
| 18% | 1.18 | 1.18 | 15.25% |
| 40% | 1.40 | 1.40 | 28.57% |
The last column is handy for a sanity check. On an 18% inclusive price, a little over 15% of what the customer pays is tax, not 18%.
Splitting tax into CGST, SGST and IGST
GST is a single tax for the buyer, but the government that receives it depends on where the supply takes place.
- Intra-state supply (supplier and place of supply in the same state): charge CGST and SGST at half the rate each. In a Union Territory without a legislature, SGST is replaced by UTGST.
- Inter-state supply (different states, or exports and imports): charge IGST at the full rate.
| Sale | Taxable value | Rate | Tax lines on the invoice |
|---|---|---|---|
| Pune seller to Mumbai buyer | ₹20,000 | 18% | CGST 9% ₹1,800 + SGST 9% ₹1,800 |
| Pune seller to Bengaluru buyer | ₹20,000 | 18% | IGST 18% ₹3,600 |
| Pune seller to Chandigarh buyer | ₹20,000 | 18% | IGST 18% ₹3,600 |
| Chandigarh seller to Chandigarh buyer | ₹20,000 | 18% | CGST 9% + UTGST 9% |
The total tax is the same in every case. What changes is how it is reported and which credit the buyer can use. Charging CGST and SGST when you should have charged IGST (or the other way round) means paying the correct tax again and claiming a refund of the wrong one, so get the place of supply right before you raise the invoice.
The GST rates in 2026
The GST Council's rate rationalisation took effect on 22 September 2025. It moved most goods and services into two main slabs and created a higher rate for luxury and sin goods.
| Rate | Typical items |
|---|---|
| Nil | Fresh food, milk, educational services, many health services, individual life and health insurance |
| 5% | Packaged food and snacks, soaps, shampoo, toothpaste, many medical devices, agricultural equipment, many everyday items |
| 18% | Most services (IT, consulting, marketing, repairs), electronics and appliances, small cars and two-wheelers up to 350cc, cement and most industrial goods |
| 40% | Pan masala, aerated and caffeinated drinks, larger cars, motorcycles above 350cc, yachts and private aircraft |
| 3% | Gold, silver and jewellery |
| 0.25% | Rough and industrial diamonds |
The old 12% and 28% slabs were largely folded into 5% and 18%. Tobacco products followed a separate timetable. Rates are fixed by HSN code for goods and SAC code for services, so always confirm your exact code before changing prices. For invoices dated before 22 September 2025, the earlier rates still apply to those supplies.
What goes into the taxable value
GST is charged on the transaction value, but several items are easy to miss:
- Packing, freight and insurance charged by the supplier as part of the supply
- Installation and commissioning billed with the goods
- Interest or late fees charged to the customer for delayed payment
- Subsidies linked to the price, other than government subsidies
- Taxes and fees other than GST that the supplier charges, such as certain cesses
Discounts given on the invoice itself reduce the taxable value. A discount agreed later, for example a year-end volume rebate, can reduce tax only if it was agreed before the supply and is adjusted through a credit note linked to the original invoices.
A complete invoice worked through
A furniture maker in Jaipur supplies a hotel in Jaipur:
| Line | Qty | Rate | Amount |
|---|---|---|---|
| Dining chairs | 40 | ₹3,200 | ₹1,28,000 |
| Dining tables | 10 | ₹11,500 | ₹1,15,000 |
| Trade discount 5% | −₹12,150 | ||
| Packing and delivery | ₹4,000 | ||
| Taxable value | ₹2,34,850 | ||
| CGST 9% | ₹21,136.50 | ||
| SGST 9% | ₹21,136.50 | ||
| Invoice total | ₹2,77,123 |
Two things to notice. The discount reduced the value before tax was calculated, and the delivery charge was added before tax. If the hotel had been in Delhi, the same ₹42,273 of tax would appear as a single IGST line.
When an invoice has items at different rates, calculate tax line by line and show a rate-wise summary. The GST invoice format under Rule 46 lists every field that must appear.
Rounding
GST is calculated to the paisa on each line. Most businesses then round the invoice total to the nearest rupee and show the difference as "round off". Keep the rounding on the total, not on individual tax lines, so your GSTR-1 values match your books.
Input tax credit in one paragraph
The GST you pay on purchases for your business is input tax. The GST you collect on sales is output tax. You pay the government the difference, provided your supplier has uploaded the invoice, you have received the goods or services and you hold a valid tax invoice. That is why getting GSTINs, place of supply and tax type right on every invoice matters: your customer's credit depends on it.
A simple example: a trader buys stock for ₹1,00,000 plus ₹18,000 IGST and sells it for ₹1,30,000 plus ₹23,400 GST. The trader pays ₹23,400 − ₹18,000 = ₹5,400 in cash, which is exactly 18% of the ₹30,000 value added.
Reverse charge
For some supplies, the buyer rather than the seller pays GST. Common cases include services from a goods transport agency, legal services from an advocate to a business, and sponsorship services. The calculation is the same, but the buyer deposits the tax and then claims credit if eligible. Invoices must say that tax is payable on reverse charge.
Common GST calculation mistakes
- Taking the rate on an inclusive price instead of dividing by (1 + rate)
- Using CGST/SGST for an out-of-state customer, usually because the delivery address and billing address were confused
- Forgetting freight or packing in the taxable value
- Reducing tax for a post-sale discount without a credit note
- Rounding each line and ending up with totals that do not match returns
- Using an old rate after 22 September 2025 because the item master in the billing software was never updated
Doing it without a calculator
For day-to-day billing, calculating tax by hand invites the mistakes above. Billing software that stores the HSN/SAC code and rate against each item, compares the customer's state with yours and picks CGST/SGST or IGST automatically removes most of the risk. MizUp Finance does this on every invoice, keeps a ledger of what customers owe and produces return-ready reports. For quick checks, quotes and negotiations, keep the GST calculator bookmarked, and use the profit margin calculator to make sure GST is added on top of your margin, not taken out of it.
Frequently asked questions
What is the formula to calculate GST?
GST amount = taxable value × GST rate ÷ 100. Add it to the taxable value to get the invoice total.
How do I calculate GST from a total that already includes GST?
Taxable value = total × 100 ÷ (100 + rate). GST = total − taxable value. For ₹1,180 at 18%, the taxable value is ₹1,000 and GST is ₹180.
Why is 18% GST on ₹1,180 not ₹212.40?
Because ₹1,180 already contains the tax. Taking 18% of an inclusive price charges tax on tax. Divide by 1.18 instead.
How is CGST and SGST calculated?
For a sale within the same state, divide the GST rate into two equal halves. At 18%, charge 9% CGST and 9% SGST on the taxable value.
Is GST charged on discounts?
Discounts shown on the invoice at the time of sale reduce the taxable value, so GST is charged on the discounted price. Later discounts need a credit note to adjust tax.
Do I charge GST on freight and packing?
Yes. Charges that are part of the supply, such as packing, freight billed by the supplier and installation, are included in the taxable value.
