India tax and savings
How Is GST Calculated?
To add GST, multiply the price by the rate; to remove it from a GST-inclusive price, divide by (100 + rate) and multiply by 100. GST of 18% on ₹10,000 is ₹1,800.00, so the customer pays ₹11,800.00; within one state that tax splits into ₹900.00 CGST and ₹900.00 SGST.
Last updated: October 20, 2026
GST slabs in 2026
The GST Council simplified the structure with effect from September 22, 2025 (often called GST 2.0). Most of the old 12% and 28% items moved into two main slabs, with a separate higher rate for luxury and sin goods:
- 0% (nil or exempt): many essentials such as fresh food, and some services such as individual health and life insurance.
- 5%: many everyday goods and some services.
- 18%: the standard rate for most goods and services, including most items that were at 28%.
- 40%: luxury and sin goods, such as larger cars and sugary aerated drinks. Since February 1, 2026 tobacco and pan masala are also at 40%, with the old compensation cess replaced by excise duty and a health cess charged outside GST.
- Special rates: 3% on gold, silver, and jewellery, and 0.25% on rough diamonds.
The correct rate depends on the HSN code (goods) or SAC code (services), so always check the notified rate for the specific item.
How to add GST
GST = price × rate ÷ 100; total = price + GST
₹10,000 × 18 ÷ 100 = ₹1,800.00; total ₹11,800.00.
How to remove GST from an inclusive price
Price before GST = inclusive price × 100 ÷ (100 + rate)
₹11,800 × 100 ÷ 118 = ₹10,000, so the GST inside ₹11,800 is ₹1,800. A common mistake is to take 18% of ₹11,800 (₹2,124), which overstates the tax.
CGST, SGST, and IGST
For a sale within one state (intra-state supply), GST is split equally between the centre (CGST) and the state (SGST, or UTGST in a union territory). At 18%, that is 9% + 9%. For a sale from one state to another (inter-state supply) or imports, the full 18% is charged as IGST. The total tax is the same; only the split differs.
GST on ₹10,000 at each slab
| Rate | GST | Total |
|---|---|---|
| 3% | ₹300.00 | ₹10,300.00 |
| 5% | ₹500.00 | ₹10,500.00 |
| 18% | ₹1,800.00 | ₹11,800.00 |
| 40% | ₹4,000.00 | ₹14,000.00 |
Input tax credit in brief
A registered business pays GST on its purchases and collects GST on its sales. It deducts the GST paid on eligible purchases (input tax credit) from the GST collected and pays only the difference. That is why GST is a tax on value added at each stage, and why the final consumer bears the full rate. Small businesses under the composition scheme pay a flat low rate on turnover instead and cannot claim input tax credit.
Key takeaways
- Add GST: price × rate ÷ 100. Remove GST: inclusive price × 100 ÷ (100 + rate).
- Main slabs since September 22, 2025: 5% and 18%, plus 40% for luxury and sin goods.
- Intra-state sales split GST into equal CGST and SGST; inter-state sales use IGST.
- 18% GST on ₹10,000 is ₹1,800.00 (₹900 CGST + ₹900 SGST).
- Check the HSN or SAC code for the exact rate on any item.
Frequently asked questions
What is 18% GST on ₹1,000?
₹180, making the total ₹1,180. Within a state that is ₹90 CGST and ₹90 SGST.
How do I calculate GST backwards from the total?
Divide the total by (1 + rate ÷ 100). For an ₹11,800 bill at 18%, ₹11,800 ÷ 1.18 = ₹10,000 before GST.
Is GST charged on GST?
No. GST is calculated on the transaction value, which includes some other charges such as packing, but not on the GST itself.
Are 12% and 28% slabs still used?
Practically no. Most items moved to 5% or 18% in September 2025, and the last 28% items, tobacco and pan masala, moved to 40% on February 1, 2026.
Sources: GST Council, CBIC - GST, GST portal