How to Calculate GST: Formula, Examples & New GST 2.0 Rates

Whether you run a shop, send invoices as a freelancer or just want to check a bill, knowing how to calculate GST is essential. This guide gives you the simple GST calculation formula for adding and removing GST, explains the new GST 2.0 rates that apply from 22 September 2025, shows how to calculate CGST and SGST and IGST, and walks through real examples – including how to find the GST inside an MRP.

What Is GST?

GST (Goods and Services Tax) is India's single indirect tax on the supply of goods and services. It replaced excise duty, VAT, service tax and many other taxes in July 2017. GST is charged at every stage of the supply chain, but each business claims credit for the GST it paid on purchases, so in the end the tax is borne by the final consumer.

GST 2.0 Rates: The New GST Slab Rates

From 22 September 2025, GST 2.0 replaced the old four-slab structure (5%, 12%, 18% and 28%) with two main slabs plus a special rate. These are the new GST rates:

The old 12% and 28% slabs no longer apply to new sales. Use them only when checking invoices dated before 22 September 2025.

GST Calculation Formula

There are two situations: adding GST to a price that does not include it (GST exclusive), and finding the GST inside a price that already includes it (GST inclusive price).

1. Add GST (exclusive price)

GST amount = Original price × GST rate ÷ 100

Total price = Original price + GST amount

2. Remove GST (inclusive price)

Original price = Inclusive price × 100 ÷ (100 + GST rate)

GST amount = Inclusive price − Original price

This second method is called reverse GST calculation. A very common mistake is to take 18% off a GST-inclusive price – that gives the wrong answer, because the 18% was added to the original price, not to the total.

Examples: How to Add GST

How to calculate 18% GST quickly: multiply the price by 0.18 for the GST, or by 1.18 for the total. For 5%, multiply by 0.05 or 1.05.

Examples: How to Remove GST (Reverse Calculation)

Shortcut: at 18%, the GST is 18/118 of the inclusive price (about 15.25%); at 5% it is 5/105 (about 4.76%).

CGST, SGST and IGST Explained

GST is split between the Centre and the states depending on where the buyer and seller are:

• Within the same state (intra-state): GST is split equally into CGST (Central GST) and SGST (State GST) – or UTGST in union territories.
• Between two states (inter-state) and imports: the full GST is charged as IGST (Integrated GST).

How to calculate CGST and SGST

Divide the GST rate by two. On a ₹1,000 sale at 18% within Maharashtra: CGST at 9% = ₹90 and SGST at 9% = ₹90, total ₹180. At 5%, CGST and SGST are 2.5% each.

IGST calculation

For the same ₹1,000 sale from Maharashtra to a customer in Karnataka, IGST calculation is simply 18% of ₹1,000 = ₹180, charged in one line. The total tax is the same – only the split changes.

Worked Example: GST on a Multi-Item Bill

Real bills often mix items with different GST rates. Suppose a shop in Pune sells three items to a customer in the same state:

The customer pays ₹85,000 + ₹11,650 = ₹96,650. If the same goods were sent to a customer in Gujarat, the invoice would show IGST of ₹11,650 instead of the CGST and SGST columns. Always calculate GST line by line at each item's own rate – applying one average rate to the whole bill gives the wrong answer.

What GST 2.0 Changed for Buyers

For households, GST 2.0 mostly meant lower prices. Many everyday products – packaged foods, soaps, shampoo, toothpaste and most medicines – moved from 12% or 18% down to 5%. Consumer durables such as air conditioners, televisions and small cars moved from 28% to 18%, and individual health and life insurance premiums became GST-free. At the same time, a new 40% rate applies to pan masala, tobacco, sugary and aerated drinks and large luxury cars. If you compare an old bill with a new one for the same product, the difference is usually the change in rate. Because GST is included in the price you pay, a lower GST rate should show up as a lower MRP on new stock.

Is GST Included in MRP?

Yes. In India the MRP (maximum retail price) printed on a packaged product includes all taxes, including GST. A shop cannot charge GST on top of the MRP. To find the GST on MRP, use the reverse formula: a product with an MRP of ₹118 at 18% contains ₹18 of GST and a base price of ₹100.

GST on Services

Most services – such as IT, consulting, telecom, banking fees, repairs and advertising – attract 18% GST. Restaurants (other than those in high-end hotels) charge 5% without input tax credit, and economy hotel rooms charge 5%. Individual health and life insurance premiums became GST-free under GST 2.0. For GST on services, the calculation is exactly the same as for goods.

What Must Be on a GST Invoice?

A valid GST invoice must show the supplier's name, address and GSTIN; a unique invoice number and date; the buyer's details (and GSTIN for business buyers); the HSN or SAC code; description, quantity and value of goods or services; the taxable value; the GST rate and amount split into CGST, SGST or IGST; the place of supply; and the signature of the supplier. Use the GST calculator to check each line before you issue the invoice.

Input Tax Credit

Input tax credit (ITC) lets a registered business subtract the GST it paid on purchases from the GST it collects on sales. If a trader buys goods for ₹10,000 + ₹1,800 GST and sells them for ₹15,000 + ₹2,700 GST, it pays the government only ₹2,700 − ₹1,800 = ₹900. ITC is available only when the supplier has filed its returns and the invoice appears in your GSTR-2B.

GST Registration Limit and Composition Scheme

• The GST registration limit is an aggregate turnover of ₹40 lakh for suppliers of goods (₹20 lakh in special category states) and ₹20 lakh for service providers (₹10 lakh in special category states).
• Registration is compulsory regardless of turnover for inter-state suppliers of goods, e-commerce sellers and several other categories.
• Under the composition scheme, small traders and manufacturers with turnover up to ₹1.5 crore (₹75 lakh in special category states) and service providers up to ₹50 lakh can pay a small fixed percentage of turnover instead of regular GST, with simpler returns but no input tax credit.

GST in Excel

To calculate GST in Excel, put the price in A2 and the rate in B2 (as 18%):

• GST amount: =A2*B2
• Total with GST: =A2*(1+B2)
• Price without GST from an inclusive price: =A2/(1+B2)
• CGST or SGST: =A2*B2/2

Common GST Calculation Mistakes

• Subtracting 18% from an inclusive price instead of dividing by 1.18.
• Charging CGST + SGST on an inter-state sale, or IGST on a local sale.
• Using the old 12% or 28% rates after 22 September 2025.
• Adding GST on top of the MRP.
• Claiming input tax credit on purchases that are blocked, such as food and personal-use items.

Frequently Asked Questions

Disclaimer: GST rates follow the GST 2.0 structure effective 22 September 2025. Rates for specific products depend on their HSN or SAC classification and may change by GST Council notification. This article is general information, not tax advice – check the latest notification or consult a GST practitioner for your business.