GST Explained: How to Add and Remove GST Correctly (With Examples)

By Dheeraj Yadav • September 24, 2026 • 3 min read

Goods and Services Tax (GST) is a single indirect tax charged on most goods and services in India. Anyone who sells, buys for a business or checks a bill sooner or later has to calculate it. This guide shows how to add GST to a price, how to take it out of a GST-inclusive price, and how the tax is split. Use the GST Calculator to verify any figure.

Adding GST to a price

When you know the price before tax, the calculation is straightforward.

• GST amount = price × rate ÷ 100
• Final price = price + GST amount

For a product priced at ₹1,000 with 18% GST, the tax is ₹180 and the customer pays ₹1,180.

Removing GST from an inclusive price

This is where most mistakes happen. If a bill shows ₹1,180 including 18% GST, many people subtract 18% of 1,180. That gives ₹967.60, which is wrong. The 18% was charged on the original price, not on the final one. The correct method is:

• Original price = inclusive price × 100 ÷ (100 + rate)
• GST amount = inclusive price − original price

So ₹1,180 × 100 ÷ 118 = ₹1,000, and the GST is ₹180. Remember that the divisor is always 100 plus the rate, so for 5% it is 105, for 12% it is 112 and for 28% it is 128.

CGST, SGST and IGST

The structure of the tax depends on where the supplier and the buyer are located.

• Within one state: the tax splits equally into Central GST and State GST. An 18% sale carries 9% CGST and 9% SGST.
• Between two states: the full rate is charged as Integrated GST (IGST), so an 18% sale carries 18% IGST.
• Union territories without legislature: UTGST replaces SGST.

The total tax paid by the customer is the same either way. The split decides which government receives it.

Reading a GST invoice

A valid tax invoice normally shows the supplier name, address and GSTIN, the invoice number and date, a description of goods or services, HSN or SAC codes, the taxable value, the rate and amount of each tax, and the total. If you are a registered buyer, check that the supplier GSTIN is correct, because errors can block your input tax credit.

Input tax credit in simple terms

A registered business can generally deduct the GST it paid on purchases used for business from the GST it collects on sales. For example, if you collected ₹18,000 in GST on sales and paid ₹11,000 on eligible purchases, you owe the difference of ₹7,000. Conditions apply, including valid invoices and the supplier having filed returns, so confirm the rules with a chartered accountant.

Common mistakes

• Subtracting the rate from the inclusive price instead of dividing by 100 plus the rate.
• Using an outdated rate. The GST Council revises rates, so verify the current rate for your item on the official portal.
• Mixing the HSN code of one product with the rate of another.
• Charging CGST and SGST on an inter-state sale.

Worked examples

• A service costs ₹25,000 plus 18%: GST ₹4,500, total ₹29,500.
• A restaurant bill of ₹2,100 includes 5% GST: base = 2,100 × 100 ÷ 105 = ₹2,000, GST = ₹100.
• A product sold for ₹5,600 including 12% GST: base = 5,600 × 100 ÷ 112 = ₹5,000, GST = ₹600.

Final thoughts

With two formulas you can handle nearly every GST question. Rates, exemptions and rules change, so always confirm the current position on the official GST portal or with a qualified professional before filing returns. This article is general information, not tax advice.