Add or remove GST from any amount instantly
GST โ Goods and Services Tax โ replaced a complicated web of central and state taxes (VAT, service tax, excise, octroi etc.) in July 2017. The idea was to create one unified tax across India. Whether you buy a phone in Mumbai or Jaipur, the GST on it is the same. Pretty straightforward in principle.
GST is a destination based tax โ meaning it goes to the state where the goods or services are consumed, not where they are produced. For most transactions within a state, you pay CGST (Central GST) + SGST (State GST), each being half the total rate. For interstate transactions, you pay IGST (Integrated GST) which equals the full rate.
India has multiple GST slabs โ 0%, 5%, 12%, 18%, and 28%:
0% (Exempt) โ Basic food items like fresh vegetables, milk, eggs, bread, salt, unprocessed grains. Also healthcare and education services.
5% โ Processed foods like frozen vegetables, packed paneer, coffee, tea. Also economy class air travel, transport services.
12% โ Business class air travel, processed foods like fruit juices, butter, cheese. Also construction of affordable housing.
18% โ This is the most common slab. Includes most services (restaurants, telecom, financial services), electronics, computers, IT services. Most of the things you buy day to day fall here.
28% โ Luxury and sin goods. Automobiles, tobacco, aerated drinks, casinos, five star hotels, cement. Also certain white goods.
This trips up a lot of people. There are two ways a price can be quoted:
GST Exclusive (price without GST): The MRP shown does not include GST. Final price = MRP + GST amount. You see this mostly in B2B transactions or in quotes from contractors.
GST Inclusive (price with GST): The price shown already includes GST. To find the base price: Base = Total Price รท (1 + GST rate/100). You see this in retail โ when you buy a phone at โน20,000, that price already includes GST.
One of the most important features of GST is Input Tax Credit. If you are a GST registered business, the GST you pay on your purchases (inputs) can be set off against the GST you collect on your sales (output). You only pay the net difference to the government.
Example: You manufacture furniture. You buy wood for โน1,00,000 and pay 18% GST = โน18,000. You sell furniture for โน2,00,000 and collect 18% GST = โน36,000. Your actual GST payable to government = โน36,000 - โน18,000 = โน18,000. This prevents tax on tax and makes the system more efficient.