GST Calculation Explained: adding GST, extracting it from an inclusive price, and the CGST, SGST and IGST split

GST is worked out in one of two ways, depending on the price you start with. If the price excludes GST, multiply it by the rate: ₹1,000 at 18% carries ₹180 of GST and costs ₹1,180. If the price already includes GST, divide instead: the tax inside ₹1,180 is ₹1,180 × 18 ÷ 118 = ₹180, which is not the same as 18% of ₹1,180. Since 22 September 2025 most goods and services are taxed at 5% or 18%, with a special 40% rate for a short list. This guide covers the rates, both calculations, the split into CGST, SGST and IGST, and rounding. Every worked figure comes from our GST calculator and the other tools linked below.

The rates in force

At its 56th meeting on 3 September 2025 the GST Council replaced the old four-slab structure with what its press release calls a two-rate structure: a merit rate of 5% and a standard rate of 18%, plus a special de-merit rate of 40% for a select few goods and services. The changes took effect on 22 September 2025. The 12% and 28% slabs are gone from the main schedules.

The rates for goods are set out in Notification No. 9/2025-Central Tax (Rate). It lists the central half of each rate, and the State half is the same.

GST rate	CGST + SGST	Examples from the Council’s release and the notification
5%	2.5% + 2.5%	Hair oil, soap, toothpaste, packaged namkeens, butter, ghee, bicycles
18%	9% + 9%	Air conditioners, televisions, cement, small cars, motorcycles up to 350 cc
40%	20% + 20%	Sweetened aerated drinks, larger cars, motorcycles above 350 cc, betting and online money gaming
3%	1.5% + 1.5%	Gold, silver, platinum and jewellery
0.25%	0.125% + 0.125%	Rough diamonds, precious and semi-precious stones
1.5%	0.75% + 0.75%	Diamonds other than rough or simply sawn diamonds

Some goods are exempt altogether. The Council moved UHT milk, pre-packaged paneer and Indian breads such as roti and paratha to nil.

Two details are easy to miss. Pan masala, cigarettes and other tobacco products did not change on 22 September 2025. They stayed in a separate 28% schedule until Notification No. 19/2025-Central Tax (Rate) moved them into the 40% schedule, and biris into the 18% schedule, from 1 February 2026. Services have their own rate notification. The standard rate there is also 18%, and the Council’s examples at 5% include gyms, salons and hotel rooms priced up to ₹7,500 a day.

The rate belongs to the item’s HSN or SAC classification, not to the seller. No calculator can tell you which rate applies to your product. Our tools ask you to choose it. The GST calculator offers 5%, 18%, 40% and 0%, and an Other rate box for 3% on gold or for an older invoice at 12% or 28%.

Adding GST to a base price

When your price is before tax, the sum is short:

GST = taxable value × rate ÷ 100, and total = taxable value + GST.

The taxable value is the transaction value: the price actually paid or payable for the supply. Section 15 of the CGST Act adds charges such as packing and commission to it, and leaves out a discount that is recorded on the invoice.

Base price	Rate	Supply	CGST	SGST / UTGST	IGST	Total
₹1,000	5%	Within a state	₹25.00	₹25.00	—	₹1,050.00
₹2,499	18%	Within a state	₹224.91	₹224.91	—	₹2,948.82
₹45,000	18%	Between states	—	—	₹8,100.00	₹53,100.00
₹60,000	3%	Within a state	₹900.00	₹900.00	—	₹61,800.00
₹12,50,000	40%	Within a state	₹2,50,000.00	₹2,50,000.00	—	₹17,50,000.00

Extracting GST from an inclusive price

Shop prices, MRPs and many quotes already include GST. Rule 35 of the CGST Rules gives the formula for pulling the tax out:

tax = inclusive value × rate ÷ (100 + rate)

The base is whatever is left, which is the same as dividing the inclusive price by 1.05, 1.18 or 1.40. In fractions, the tax is 1/21 of a 5% inclusive price, 9/59 of an 18% inclusive price and 2/7 of a 40% inclusive price.

Inclusive price	Rate	Base value	GST inside	Subtracting the rate from the total understates the base by
₹1,180	18%	₹1,000.00	₹180.00	₹32.40
₹999	5%	₹951.43	₹47.57	₹2.38
₹10,000	18%	₹8,474.58	₹1,525.42	₹274.58
₹50,000	18%	₹42,372.88	₹7,627.12	₹1,372.88
₹25,000	40%	₹17,857.14	₹7,142.86	₹2,857.14

The common mistake

The mistake is to take the rate off the inclusive price: “₹50,000 less 18% is ₹41,000, so the GST is ₹9,000.” GST is a percentage of the base, not of the total. The correct base is ₹42,372.88 and the tax is ₹7,627.12. Check it forwards: 18% of ₹42,372.88 is ₹7,627.12, and the two add up to ₹50,000.

The error grows with the rate. It is ₹2.38 on a ₹999 item at 5%, ₹1,372.88 on ₹50,000 at 18% and ₹2,857.14 on ₹25,000 at 40%. If you are the seller, the wrong method makes you declare too much tax and book too little revenue. If you are checking a bill, it makes a correct invoice look wrong.

CGST and SGST, or IGST

The total GST is the same wherever the buyer is. What changes is who receives it.

• Within one State or Union territory. The tax is split into two equal halves: central tax (CGST) and State tax (SGST), or Union territory tax (UTGST). At 18% that is 9% and 9%.
• Between two States. When the supplier’s location and the place of supply are in different States or Union territories, one integrated tax (IGST) is charged at the full rate.

A ₹45,000 supply at 18% carries ₹8,100 of tax either way: ₹4,050 of CGST plus ₹4,050 of SGST inside a State, or ₹8,100 of IGST across a State border. The law caps CGST at 20% and IGST at 40%, which is why 40% is the top rate.

The split has to be visible. Rule 46 requires a tax invoice to show, among other things, the HSN code, the taxable value, the rate and the amount of each tax separately, and the place of supply with the name of the State for an inter-State supply. In the GST calculator the Supply option switches between “Within a state (CGST + SGST)” and “Between states (IGST)”. In the invoice generator it is the Inter-state (IGST) tick box.

Discounts and margins

Discount first, then GST. A discount shown on the invoice comes off the taxable value before tax is worked out. The discount calculator turns ₹5,000 less 10% into ₹4,500. GST at 18% on that is ₹810, so the customer pays ₹5,310. Charging tax on the full ₹5,000 would add ₹900 and bill ₹5,900.

Work out margin before GST. The GST you collect is not your income. Suppose an item costs you ₹800 before tax and you want a 25% margin. The markup and margin calculator gives a selling price of ₹1,066.67. Add 18% GST of ₹192.00 and the customer pays ₹1,258.67. The reverse error is common. An item that costs ₹800 and sells for ₹1,180 including 18% GST has a pre-tax price of ₹1,000 and a margin of 20%. Comparing ₹800 with ₹1,180 would suggest 32.2%.

Rounding

Tax rarely lands on a whole paisa, so every tool has to round somewhere.

In the GST calculator amounts are shown to the nearest paisa. When the tax is an odd number of paise, the two halves cannot both be exact. On ₹999 inclusive at 5% the GST is ₹47.57, and CGST and SGST each show as ₹23.79, which add up to ₹47.58. The total is right, and each half is rounded for display.

On an invoice the two halves must be real, equal amounts. The invoice generator works out CGST on the taxable value, rounds it once to the nearest paisa and charges the same amount as SGST. A base of ₹951.43 at 5% gives ₹23.79 + ₹23.79 and a total of ₹999.01, one paisa above the ₹999 you started from. A base of ₹846.61 at 18% gives ₹76.19 + ₹76.19 and a total of ₹998.99. This is normal when a base is back-calculated from an MRP. Tick Round total to a whole unit and the invoice adds a “Round off” line of one paisa, down in the first case and up in the second, so both total ₹999.00.

In the law, section 170 of the CGST Act says that tax, interest, penalty and other sums payable under the Act are rounded off to the nearest rupee: 50 paise or more goes up and anything less is ignored.

How to check this yourself

1. Open the GST calculator and enter the Amount.
2. Under The amount, choose “Excludes GST (add it)” or “Includes GST (extract it)”.
3. Pick the GST rate printed on the invoice, or Other rate for one that is not listed.
4. Set Supply to match the invoice: CGST and SGST, or IGST.
5. Test the result two ways. Base plus GST must equal the total, and GST divided by the base must equal the rate. If GST divided by the total equals the rate, someone has made the common mistake.

To check a whole document, the invoice generator’s sample is a useful reference: ₹69,000 of services at 18% shows ₹6,210 of CGST and ₹6,210 of SGST, total ₹81,420, or one ₹12,420 IGST line when the supply is inter-State.

What the tools do not do: they do not look up the rate for an HSN or SAC code, and they do not handle compensation cess, reverse charge, the composition scheme, input tax credit or e-invoicing. They produce the arithmetic and a clean document. Your GST return and the portal remain the record.

Related tools

• GST calculator: add GST to a base price or extract it from an inclusive one, with the CGST and SGST or IGST split.
• Invoice generator: a GST invoice with HSN column, per-line or single rate, round-off and amount in words.
• Quotation generator: a priced quote with discount and GST shown before the customer commits.
• Receipt generator: a receipt for a payment against an invoice.
• Discount calculator: the price after one or two discounts, before tax.
• Markup and margin calculator: the pre-GST selling price for a target margin.

Rates and rules checked against CBIC notifications, the GST Council’s release and the CGST and IGST Acts on 13 October 2026. This is general information, not tax advice. Confirm the rate for your goods or services against the current notification or with a qualified adviser.