Frequently asked questions
In India, GST rates depend on the classification of goods or services. The recent reforms have simplified the previous four-tier system into three main tax slabs: 5%, 18%, and 40%. While some goods and services are exempt from GST, specific items like gold attract special concessional rates.
To calculate 18% GST on a total amount, start by identifying the original price of the product or service. Then, use this formula: GST Amount = (Original Price × 18) ÷ 100. For instance, if a service costs Rs.1,000, the GST would be Rs.180, making the total Rs.1,180. The 18% rate is the standard GST rate applicable to many goods and most services.
A GST calculator enables manufacturers and wholesalers to quickly calculate the final selling price of their products. By entering the production cost, target profit margin, and the applicable GST rate (5%, 18%, or 40%), the calculator generates the total price. It also provides a detailed breakdown of the GST amount into CGST and SGST for intra-state transactions or IGST for inter-state sales.
To calculate the GST amount included in a product’s MRP, you can use a reverse calculation method. Start by identifying the applicable GST rate. Then apply this formula: GST Amount = MRP – (MRP × 100 / (100 + GST Rate)). For example, if a product’s MRP is Rs.118 and the GST rate is 18%, the GST component would be Rs.18 (118 – (118 × 100 / 118)), making the base price Rs.100. This method helps to extract the tax portion already embedded in the final price.
GST is calculated based on the transaction value of goods or services, which is the actual price paid or payable for the supply. This amount includes all expenses borne by the supplier, such as packaging, delivery charges, commissions, and other incidental costs. However, any discounts offered before or at the time of supply are subtracted. The GST rate—ranging from 5% to 40% depending on the category of the product or service under the revised GST slabs—is then applied to this transaction value.
Calculating GST under the reverse charge mechanism (RCM) follows the same method as the forward charge, but the key difference is who is responsible for paying the tax. Under RCM, the recipient of the goods or services, rather than the supplier, is liable to pay the GST to the government. For instance, if a company purchases services worth Rs.10,000 with an 18% GST applicable under RCM, the company must directly pay Rs.1,800 (split as 9% CGST and 9% SGST) to the government. This amount can then be claimed back as Input Tax Credit (ITC), subject to eligibility.
A reverse GST calculator lets you determine the original price before tax when you know the total amount paid (including tax) and the tax rate. It effectively “removes” the tax from the inclusive price.
This tool is essential for calculating the net price from GST, VAT, or sales-tax-inclusive bills. It is particularly useful for students, accountants, business owners, and anyone who regularly handles invoices or receipts.
First, divide the GST-inclusive price by (1 + GST rate ÷ 100) to calculate the base price. Then, subtract this base price from the total price to find the GST amount.
To calculate 5% GST using a standard calculator, multiply the base price by 0.05 to find the tax, then add it to the original amount. Alternatively, multiply the base price by 1.05 to get the total price including GST.
For example, on Rs. 1,000:
GST = 1,000 × 0.05 = Rs. 50
Total price = 1,000 + 50 = Rs. 1,050
The GST on Rs. 50,000 depends on the applicable rate (5%, 12%, 18%, or 28%). At the standard 18% rate, the GST comes to Rs. 9,000, making the total price Rs. 59,000.
To calculate GST on Rs. 500, multiply the amount by the GST rate (e.g., 18%) and divide by 100.
For example, at 18% GST:
GST = 500 × 18 ÷ 100 = Rs. 90
Total price = 500 + 90 = Rs. 590
