Everything an Indian business owner, freelancer, or CA needs to calculate GST correctly and never overpay or underpay again.
📋 Table of Contents
What Is GST and How Does It Work in India?
Goods and Services Tax (GST) replaced VAT, service tax, and excise duty on July 1, 2017. It is a destination-based tax with a dual structure: Central GST (CGST) and State GST (SGST) for intrastate transactions, and Integrated GST (IGST) for interstate. The end consumer bears the full burden; businesses in the chain offset GST paid on purchases against GST collected from customers through Input Tax Credit (ITC).
GST Slab Rates - Which Rate Applies to Your Business?
| Rate | Category | Common Examples |
|---|---|---|
| 0% | Essential goods | Fresh vegetables, milk, eggs, books, healthcare |
| 5% | Basic necessities | Packaged food, edible oils, economy transport |
| 12% | Standard goods | Processed food, apparel above Rs.1,000, mobiles |
| 18% | Most services | Software, professional services, electronics |
| 28% | Luxury and demerit | Cars, tobacco, cement, aerated drinks |
Restaurants without ITC pay 5% on food deliveries. Hotels above Rs.7,500 room tariff pay 18%. Always verify your HSN or SAC code on the GST portal as rates are revised periodically by the GST Council.
How to Calculate GST - Step by Step
Adding GST to a base price: GST Amount = Base Price x Rate/100. Total Invoice = Base Price + GST Amount.
Example: Software service Rs.10,000 at 18% GST. GST = Rs.1,800. Invoice total = Rs.11,800. For intrastate: CGST Rs.900 + SGST Rs.900. For interstate: IGST Rs.1,800.
Use our free GST Calculator to compute CGST/SGST split, IGST for interstate transactions, and reverse calculations instantly.
Reverse GST Calculation - Base Price from Inclusive Price
Formula: GST Amount = Total Price x GST Rate / (100 + GST Rate). Base Price = Total - GST Amount.
| Rate | GST from Inclusive Price | Base Price Formula |
|---|---|---|
| 5% | Total x 5/105 | Total x 100/105 |
| 12% | Total x 12/112 | Total x 100/112 |
| 18% | Total x 18/118 | Total x 100/118 |
| 28% | Total x 28/128 | Total x 100/128 |
GST Return Filing Deadlines You Cannot Miss
- GSTR-1 (outward supplies): Monthly filers - 11th of next month. Quarterly - 13th after quarter end.
- GSTR-3B (summary return + payment): Monthly - 20th. Quarterly - 22nd or 24th depending on state.
- GSTR-9 (annual return): 31st December of the following financial year.
Late fee: Rs.50 per day for GSTR-3B (Rs.25 for nil returns). Interest at 18% per annum on unpaid tax.
Input Tax Credit - How to Claim What You Are Owed
ITC prevents cascading taxation. You can claim ITC on raw materials, capital goods, and business services. ITC is NOT available on personal expenses, food and beverages (unless core business), motor vehicles (with exceptions), and blocked credits under Section 17(5). ITC is available only after your supplier files GSTR-1 and their invoice appears in your GSTR-2B - reconcile monthly.
5 Common GST Mistakes Indian Businesses Make
- Using wrong HSN/SAC code leading to incorrect rate and ITC mismatch
- Missing Reverse Charge Mechanism on GTA, legal fees, and import of services
- Not reconciling GSTR-2B - claiming ITC that suppliers have not filed
- Incorrect place of supply determination between intrastate and interstate
- Claiming ITC on blocked credits like employee food, gifts, and personal vehicles
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