How GST Calculation Works in India
Under the GST regime, tax is levied at each stage of supply based on destination. For intra-state supply within the same state or union territory, the tax rate is divided equally between CGST (Central GST) and SGST (State GST). For interstate transactions between two different states, the entire tax is levied as IGST (Integrated GST).
GST Inclusive vs Exclusive Formula
When creating a B2B invoice where GST is extra: GST Amount = (Pre-tax Base × GST Rate) / 100. When breaking down a B2C retail MRP where tax is already included: Base Amount = Total Amount × (100 / (100 + GST Rate)) and GST = Total Amount - Base Amount.
Frequently Asked Questions
What are the 4 primary GST tax rate slabs in India?
The four primary GST slabs are 5% (essential goods), 12% (processed items), 18% (standard goods and services), and 28% (luxury and sin goods).
When is IGST charged instead of CGST and SGST?
IGST is charged when the supplier and the place of supply are in two different states or union territories, or in the case of imports and exports.
Can registered businesses claim Input Tax Credit (ITC)?
Yes. Businesses with valid GSTIN can claim Input Tax Credit on eligible purchases to offset their output GST liability upon filing GSTR-3B.