GST (Goods and Services Tax) is India's unified indirect tax introduced on July 1, 2017, replacing VAT, service tax, and excise duty. The four main rates are 5%, 12%, 18%, and 28%. Shoppers use a GST calculator to check the tax on a bill, and businesses use it to price goods and raise correct invoices.
The formula. To add GST: GST amount = Base × rate ÷ 100 and Final = Base × (1 + rate ÷ 100). To remove GST from a tax-inclusive price: Base = Final ÷ (1 + rate ÷ 100), then GST = Final − Base. Here Base is the pre-tax price, rate is the GST percentage and Final is the price including GST.
Worked example. On a ₹1,000 item at 18% GST, the GST is 1,000 × 18 ÷ 100 = ₹180, so the final price is ₹1,180. For an intra-state sale that ₹180 splits into ₹90 CGST and ₹90 SGST. In reverse, a ₹1,180 inclusive price gives a base of 1,180 ÷ 1.18 = ₹1,000 and ₹180 of GST.
For intra-state transactions, GST is split equally into CGST (Central GST) and SGST (State GST). For inter-state transactions, IGST = full GST rate is applied.
Common GST rates: Essentials (milk, vegetables) — 0%, Processed food, medicines — 5%, Mobile phones, edible oil — 12%, Most services, electronics — 18%, Luxury goods, tobacco, aerated drinks — 28%.
Where it's used. GST appears on almost every Indian invoice — retail bills, restaurant receipts, phone and internet plans, online orders and professional services. Businesses rely on it to issue compliant invoices and claim input-tax credit, while shoppers use it to verify a bill or recover the pre-tax price from an inclusive amount.