About the Goods and Services Tax (GST) Calculator
The Goods and Services Tax (GST) is a unified, multi-stage destination-based indirect tax levied on the sale of goods and services. Whether you are generating business-to-business (B2B) tax invoices, calculating consumer retail billing, or verifying vendor purchase orders, understanding how to apply tax on exclusive amounts or strip tax from inclusive amounts prevents costly accounting discrepancies.
1. GST Exclusive Formula (Add GST)
GST Amount = (Net Price × GST Rate) ÷ 100
Gross Price = Net Price + GST Amount
Used when quote prices represent baseline merchandise value and statutory tax must be charged on top.
2. GST Inclusive Formula (Reverse Extract)
Net Price = Gross Price ÷ (1 + GST Rate ÷ 100)
GST Amount = Gross Price - Net Price
Used to extract the underlying product cost and exact tax paid from maximum retail price (MRP) shelf tags.
Understanding Tax Structure: Intra-State vs. Inter-State
- Intra-State Supply (Within Same State): Revenue is divided equally between the Central Government (CGST = Rate ÷ 2) and the State Government (SGST = Rate ÷ 2). For an 18% item, 9% goes to CGST and 9% to SGST.
- Inter-State Supply (Across State Borders or Imports): The entire tax is collected as Integrated GST (IGST = Full Rate) by the Central Government and apportioned to the destination consumption state.
- Input Tax Credit (ITC): Registered businesses can offset GST paid on inward commercial purchases against GST liability collected on outward sales, preventing cascading tax-on-tax inflation.