GST math is simple in theory and brutal in practice. A 18% slab sounds straightforward until you realise inter-state vs intra-state, inclusive vs exclusive, reverse-charge, and Composition Scheme each change the formula. This guide explains exactly how the GST calculator computes your tax — and when the answer it gives you is wrong.
What are CGST, SGST, and IGST and when does each apply?
GST is a dual tax — the same supply attracts two components depending on whether it's an intra-state or inter-state transaction:
- Intra-state supply (buyer and seller in same state): CGST (Central) + SGST (State) split equally. An 18% GST = 9% CGST + 9% SGST.
- Inter-state supply (different states or import/export): IGST (Integrated) at the full rate. The Centre then settles the State share later.
- Union Territory supplies: CGST + UTGST (instead of SGST) for transactions inside UTs without their own legislature.
Example: A Delhi-based seller sells software for ₹1,00,000 to a Mumbai customer (Maharashtra) — IGST of ₹18,000 applies. Same sale to a Delhi customer — CGST ₹9,000 + SGST ₹9,000. Total tax is identical (₹18,000), only the split changes.
How do I calculate GST inclusive vs exclusive of tax?
This is the #1 source of confusion on quotations and invoices. The formulas are:
| Scenario | Formula | Example (18% slab) |
|---|---|---|
| GST exclusive (add tax to base) | Total = Base × (1 + GST%) | ₹1,000 × 1.18 = ₹1,180 |
| GST inclusive (extract tax from total) | Base = Total ÷ (1 + GST%); Tax = Total − Base | ₹1,180 ÷ 1.18 = ₹1,000; Tax = ₹180 |
Most B2B quotations are GST-exclusive ("plus GST as applicable"), most B2C retail prices (MRP, restaurant bills, ride-hailing) are GST-inclusive. Always state which one you're using on the invoice — the GSTR-1 mismatch otherwise costs hours of reconciliation.
What GST slab applies to my product or service?
India runs a 5-slab GST structure under the 2017 framework, with selective revisions every Council meeting:
- 0% (NIL): Fresh food, unprocessed grains, milk, books, healthcare services, education
- 5%: Packaged food, transport services, restaurants without AC, footwear under ₹1,000, household necessities
- 12%: Processed food, business class air travel, mobile phones, computers, agarbattis, frozen meats
- 18%: Most services (consulting, software, marketing, professional fees), restaurants with AC, packaged ready-to-eat, hotels with ₹7,500-₹15,000 tariff
- 28%: Luxury goods, automobiles (varies with cess), tobacco, aerated drinks, premium hotels above ₹15,000
For ambiguous items (cab aggregators, OTT subscriptions, education tech), refer to the latest GST Council notification — slabs shift more often than most accountants update their software.
When does reverse charge (RCM) flip the calculation?
Under reverse charge, the recipient — not the supplier — pays GST directly to the government. RCM kicks in for: legal services from advocates, services from a Goods Transport Agency (GTA), purchases from unregistered suppliers (in some sectors), and a few notified categories. The recipient still claims ITC on the RCM-paid amount, making it net-neutral — but it must flow through GSTR-3B correctly. Missing RCM entries trigger system-generated DRC-01A notices.
How does Composition Scheme change GST math?
Under Composition Scheme (turnover up to ₹1.5 crore for goods, ₹50 lakh for services), the taxpayer pays a flat tax on turnover instead of detailed input/output GST:
- Traders: 1% of turnover
- Manufacturers: 1% of turnover
- Restaurants (non-AC): 5% of turnover
- Service providers under composition: 6% of turnover
Composition dealers CANNOT collect GST from customers separately and CANNOT claim input tax credit. The math is simple but the cost is real — for any business with significant inputs, regular GST + ITC almost always works out cheaper.
Want to skip the math?
Try our free GST Calculator tool — it handles inclusive/exclusive, inter-state vs intra-state, RCM, and Composition Scheme in one click. For full GST Registration or monthly return filing, RegisterEase delivers everything from GSTIN issuance to GSTR-3B filing for ₹999/month.