GST Calculator

What is GST and How Does it Work?

GST (Goods and Services Tax) replaced VAT, service tax, excise duty and over a dozen other taxes on 1 July 2017. It is a destination-based tax — the revenue goes to the state where the goods or services are consumed, not where they are produced. Every business in the supply chain collects GST from its buyer and claims credit for the GST it already paid to its supplier. Only the end consumer bears the actual cost — this is called the Input Tax Credit (ITC) mechanism.

GST Rate Slabs — What Gets Taxed at What Rate?

• 0% — Essentials: Fresh vegetables, milk, eggs, curd, fresh meat, books, education services, healthcare.
• 3% — Precious metals: Gold, silver, precious stones and jewellery.
• 5% — Basic goods: Packaged food, transport services, economy class air travel, small restaurants.
• 12% — Standard goods: Computers, mobile phones, processed food, medicines, umbrellas, sewing machines.
• 18% — Most services and goods: Restaurants (AC), financial services, software, IT services, engineering goods — the most commonly applied rate.
• 28% — Luxury and demerit goods: Automobiles, tobacco, cement, aerated drinks, casinos, race clubs.

CGST, SGST, IGST — The Three Components Explained

For intra-state sales (buyer and seller in the same state): the total GST is split equally between the centre (CGST) and the state (SGST). An 18% GST on ₹1,000 gives ₹90 CGST + ₹90 SGST. For inter-state sales (different states) or imports: only IGST applies at the full rate. An 18% IGST on ₹1,000 gives ₹180 IGST — the centre distributes the state portion to the destination state. This distinction matters for businesses filing GSTR returns but has no impact on the end consumer's total tax.

GST Registration — Who Must Register?

Businesses with annual turnover above ₹40 lakh for goods (₹20 lakh for services, ₹10–20 lakh for special category states) must register for GST. Voluntary registration is also available below these thresholds — beneficial if you supply to registered businesses that want to claim ITC. Mandatory registration regardless of turnover applies to: e-commerce sellers, inter-state suppliers, casual taxable persons, reverse charge payers and non-resident taxable persons. Always check with our Income Tax Calculator to understand how GST registration affects your overall tax picture.

Common GST Mistakes to Avoid

The most common error: calculating GST on an already GST-inclusive price using the standard formula. If a product is priced at ₹1,180 including 18% GST, the correct base price is ₹1,180 ÷ 1.18 = ₹1,000 — not ₹1,180 − 18% = ₹967.6. Use the Remove GST mode on this calculator for any inclusive price. Also use our TDS Calculator for TDS compliance on B2B payments.

✓Verified by ToollyX Team · Last updated June 2026