What is GST?
GST (Goods and Services Tax) is a comprehensive, multi-stage, destination-based tax that is levied on every value addition. It is applicable across India and replaces various indirect taxes.
Inclusive vs Exclusive GST
- Exclusive GST: GST is added on top of the base price.
- Inclusive GST: The total price already includes GST, so the base price must be derived by reverse calculation.
Formula Used
For Exclusive GST: GST Amount = (Original Amount x GST Rate) / 100 Final Price = Original Amount + GST Amount For Inclusive GST: GST Amount = Original Amount x [GST Rate / (100 + GST Rate)] Base Price = Original Amount - GST Amount
Example
- Exclusive GST:
Base Price = Rs. 1000
GST (18%) = Rs. 180
Final Price = Rs. 1180 - Inclusive GST:
Total Price = Rs. 1180 (with GST)
GST = Rs. 180 (Rs. 1180 x 18 / 118)
Base Price = Rs. 1000
Frequently Asked Questions (FAQs)
How is GST applied on MRP?
If MRP is inclusive of GST, you need to use reverse calculation to extract GST.
Can I calculate GST for multiple rates?
Yes, GST calculators support different rates like 5%, 12%, 18%, and 28%.
Is GST applicable to services too?
Yes, GST applies to goods and services both.
What is the benefit of knowing inclusive vs exclusive?
It helps businesses and consumers understand the actual value of products and tax breakdowns.