How Goods and Services Tax (GST) Calculations Work in India
The Goods and Services Tax (GST) is a comprehensive destination-based indirect tax levied on the manufacture, sale, and consumption of goods and services throughout India.
1. GST Calculation Formulas
- GST Exclusive (Adding GST):
GST Amount = (Base Amount × GST Rate) / 100
Gross Amount = Base Amount + GST Amount - GST Inclusive (Extracting GST):
Base Amount = Gross Amount / (1 + (GST Rate / 100))
GST Amount = Gross Amount - Base Amount
2. Standard GST Slabs
- 5%: Mass consumption items, packaged food grains, basic transport.
- 12%: Processed foods, business class air tickets, medical equipment.
- 18%: Standard rate for most services (IT, software, professional consulting), financial services, and capital goods.
- 28%: Luxury vehicles, aerated drinks, and sin goods.