What Is GST?

GST (Goods and Services Tax) is a unified indirect tax levied on the supply of goods and services in India. Introduced in 2017, it replaced a complex web of central and state taxes with a single tax structure. GST is a destination-based, multi-stage tax — it is collected at every stage of the supply chain but ultimately paid by the end consumer.

Every business registered under GST collects tax from customers and remits it to the government, while claiming credit for the GST they've already paid on their inputs — this is called the Input Tax Credit (ITC) mechanism.

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GST Rate Slabs in India

0%
Exempt
Fresh vegetables, milk, eggs, salt, bread
5%
Essential
Packaged food, tea, coffee, medicines
12%
Standard
Processed food, business services, computers
18%
Standard+
Most goods & services, hotels, restaurants
28%
Luxury
Luxury cars, tobacco, aerated drinks, casinos

How to Calculate GST — Add & Remove

Adding GST to a price (exclusive to inclusive)

Add GST
GST Amount = Price × (Rate ÷ 100)
Final Price = Price + GST Amount

Example: Adding 18% GST to ₹5,000 → GST = ₹900 → Final Price = ₹5,900

Removing GST from a price (inclusive to exclusive)

Remove GST
Original Price = GST-inclusive Price ÷ (1 + Rate ÷ 100)
GST Amount = GST-inclusive Price − Original Price

Example: Removing 18% GST from ₹5,900 → Original Price = 5900 ÷ 1.18 = ₹5,000 → GST = ₹900

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CGST, SGST and IGST Explained

GST in India has three components depending on the nature of the transaction:

  • CGST (Central GST) — Collected by the central government on intra-state transactions. Always equals SGST.
  • SGST (State GST) — Collected by the state government on intra-state transactions. Always equals CGST.
  • IGST (Integrated GST) — Collected by the central government on inter-state transactions. Equals CGST + SGST combined.

Example: An 18% GST sale within Maharashtra = 9% CGST + 9% SGST. An 18% GST sale from Maharashtra to Delhi = 18% IGST.

Practical GST Calculation Examples

Invoice for a service at 18% GST

  • Service fee: ₹20,000
  • CGST (9%): ₹1,800
  • SGST (9%): ₹1,800
  • Total invoice: ₹23,600

Retail purchase at 12% GST

  • Product MRP (GST-inclusive): ₹1,120
  • Base price: 1120 ÷ 1.12 = ₹1,000
  • GST amount: ₹120
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Frequently Asked Questions

India has five main GST slabs: 0% (essential goods), 5% (basic necessities), 12% (processed food, business services), 18% (most goods and services), and 28% (luxury goods, tobacco, vehicles).

GST Amount = Original Price × (GST Rate ÷ 100). Final Price = Original Price + GST Amount. For example, adding 18% GST to ₹1000: GST = ₹180, Final Price = ₹1180.

Original Price = GST-inclusive Price ÷ (1 + GST Rate ÷ 100). For example, removing 18% GST from ₹1180: Original Price = 1180 ÷ 1.18 = ₹1000.

For intra-state transactions, GST is split equally between CGST (Central GST) and SGST (State GST). For inter-state transactions, IGST (Integrated GST) applies, which equals the combined CGST + SGST rate.

Businesses with an annual turnover exceeding ₹40 lakhs (₹20 lakhs for services) must register for GST. E-commerce operators, inter-state suppliers, and some other categories must also register regardless of turnover.