How to Calculate GST in India (Formulas & Rules)
The Goods and Services Tax (GST) is an indirect destination-based consumption tax. Depending on whether your counter prices already include tax or whether tax must be added on top of wholesale prices, use the following official formulas:
1. GST Exclusive (Adding Tax)
Used by wholesalers, manufacturers, and B2B invoices.
GST Amount = (Base Price × Rate) ÷ 100
Gross Total = Base Price + GST Amount
Gross Total = Base Price + GST Amount
2. GST Inclusive (Extracting Tax)
Used by retail shops selling goods at Maximum Retail Price (MRP).
Base Price = Gross Amount ÷ [1 + (Rate ÷ 100)]
GST Amount = Gross Amount - Base Price
GST Amount = Gross Amount - Base Price
Overview of Official GST Tax Slabs in India
- 0% (Nil Rated): Unpackaged food grains, fresh milk, unbranded flour, salt, books, curd.
- 5% Slab: Packaged edible oil, sugar, tea, coffee, life-saving medicines, apparel under ₹1,000.
- 12% Slab: Processed foods, butter, cheese, ghee, notebooks, exercise books, medical instruments.
- 18% Slab: Capital goods, electrical equipment, computing hardware, consumer durables, business software.
- 28% Slab: Luxury automobiles, air conditioners, pan masala, cement, de-merit luxury items.