What is GST?
Goods and Services Tax (GST) is India’s indirect tax on the supply of goods and services, in force since 1 July 2017. It is collected at each stage of the supply chain, and registered businesses claim credit for the GST they paid on inputs, so the tax ultimately falls on the final consumer.
Step 1: Find the right rate
Every product has an HSN code and every service an SAC code. The rate notification lists the rate for each. Since 22 September 2025 most items are at 5% or 18%, with 40% for select luxury and sin goods and special rates for gold (3%) and precious stones. Do not guess — the same product can fall in different slabs depending on its description or conditions.
Step 2: Is your price inclusive or exclusive?
- Exclusive (“₹1,000 + GST”): add tax on top. GST = 1,000 × 18% = ₹180, total ₹1,180.
- Inclusive (MRP, “₹1,180 incl. GST”): extract tax. Taxable = 1,180 ÷ 1.18 = ₹1,000, GST ₹180.
Step 3: Intra-state or inter-state?
Same State/UT for supplier location and place of supply → split GST into CGST and SGST/UTGST, half each. Different → charge the whole as IGST. See CGST/SGST and IGST.
Step 4: Apply discounts first
An on-invoice discount reduces the taxable value before GST: 10% off ₹5,000 at 18% → taxable ₹4,500, GST ₹810, total ₹5,310.
Step 5: Round correctly
Calculate each tax head to the paisa. Many businesses then round the invoice total to the nearest rupee with a separate round-off line.
Worked example: a small shop bill
| Item | Value | Rate | GST |
|---|---|---|---|
| Packaged namkeen (10 × ₹50) | ₹500.00 | 5% | ₹25.00 |
| Mixer grinder | ₹3,000.00 | 18% | ₹540.00 |
| Total | ₹3,500.00 | ₹565.00 |
Grand total ₹4,065.00 (intra-state: CGST ₹282.50 + SGST ₹282.50). Rates are illustrative — check the HSN entry for your product. Try it in the multi-item calculator.
Common GST calculation mistakes
- Taking 18% of an inclusive total instead of dividing by 1.18.
- Using the old 12% or 28% slab on supplies after 22 September 2025 (bricks and roofing tiles are the exception, still at 12%).
- Charging CGST + SGST on an inter-state supply because the buyer’s billing address is local.
- Charging GST before deducting an on-invoice discount.
- Rounding only the total and letting CGST and SGST drift by a paisa.
Last reviewed 8 November 2026.