How to Calculate GST in India: Complete Guide 2026
Whether you are a business owner raising invoices, a freelancer charging clients, or a consumer wanting to know what tax you paid — understanding GST calculation is essential. This guide covers the GST formula, all slabs, how to add and remove GST, and when CGST, SGST, and IGST apply.
What is GST?
Goods and Services Tax (GST) is India's unified indirect tax that replaced a complex web of central and state taxes (VAT, service tax, excise duty, etc.) in July 2017. It applies to the supply of goods and services across India. GST is a destination-based tax — it flows to the state where the goods or services are consumed, not where they are produced.
GST Slabs in India (2026)
| GST Rate | What Falls Under It |
|---|---|
| 0% | Essential food items (fresh vegetables, milk, eggs, bread), educational services, healthcare |
| 5% | Packaged food, economy air travel, life-saving medicines, newspapers |
| 12% | Processed food, business class air travel, mobile phones, computers |
| 18% | Most services (restaurants, IT, telecom, banking fees), electronics, most manufactured goods |
| 28% | Luxury cars, tobacco, aerated drinks, casinos, online gaming |
CGST vs SGST vs IGST — What's the Difference?
GST is split into three components depending on whether the transaction is within a state or between states:
| Type | Full Form | When it Applies | Who Gets It |
|---|---|---|---|
| CGST | Central GST | Within same state (intra-state) | Central Government |
| SGST | State GST | Within same state (intra-state) | State Government |
| IGST | Integrated GST | Between two states (inter-state) or imports | Central Govt (shared later) |
For an intra-state sale at 18% GST: you charge 9% CGST + 9% SGST. For an inter-state sale at 18%: you charge 18% IGST.
How to Add GST to a Price (GST-Exclusive)
When you have the base price (before GST) and want to find the final price:
Final Price = Base Price + GST Amount
Example: Base Price = ₹10,000, GST = 18%
GST Amount = ₹10,000 × 0.18 = ₹1,800
Final Price = ₹11,800
How to Remove GST from a Price (GST-Inclusive)
When you have the final price (GST already included) and want to find the base price:
GST Amount = Final Price − Base Price
Example: Final Price = ₹11,800, GST = 18%
Base Price = ₹11,800 ÷ 1.18 = ₹10,000
GST Amount = ₹11,800 − ₹10,000 = ₹1,800
GST Invoice Example: Intra-State Sale
| Item | Amount |
|---|---|
| Product/Service | ₹10,000 |
| CGST @ 9% | ₹900 |
| SGST @ 9% | ₹900 |
| Total Invoice Value | ₹11,800 |
What is Input Tax Credit (ITC)?
One of the most powerful features of GST is Input Tax Credit. If you are a GST-registered business, you can claim credit for the GST you paid on your purchases and offset it against the GST you collect from customers.
Example: You buy raw materials paying ₹900 GST. You sell finished goods collecting ₹1,800 GST. Your net GST payable to the government = ₹1,800 − ₹900 = ₹900.
This mechanism prevents "tax on tax" and is why GST is more efficient than the old VAT system.
GST for NRIs Buying Property in India
If you are an NRI purchasing property in India, GST applies only to under-construction properties, not ready-to-move-in or resale properties:
- Affordable housing (price up to ₹45 lakh): 1% GST
- Non-affordable housing: 5% GST (no ITC for builder)
- Commercial property: 12% GST
- Ready-to-move/resale: 0% GST
Frequently Asked Questions
Is GST charged on exports?
No. Exports are zero-rated under GST. The exporter can claim a refund of GST paid on inputs. This makes Indian exports more competitive internationally.
Can an individual (not business) register for GST?
Yes. Any individual supplying goods or services above the threshold limit (₹20 lakh for services, ₹40 lakh for goods) must register. Freelancers, consultants, and sole proprietors are all treated as individuals under GST.
What is the GST on restaurant bills?
Restaurants without AC: 5% GST (no ITC). AC restaurants and those in starred hotels: 5% GST. Premium restaurants inside 5-star hotels: 18% GST with ITC.