What is GST?
GST (Goods and Services Tax) is a comprehensive indirect tax levied on the supply of goods and services in India. It has replaced multiple cascading taxes levied by the central and state governments, creating a unified national market.
GST is a destination-based consumption tax, meaning it is collected at the point of consumption rather than the point of origin. This tax system aims to eliminate the cascading effect of taxes (tax on tax) and create a transparent tax structure.
How is GST Calculated?
GST calculation depends on whether you're adding GST to a base amount or removing GST from a total amount. The formulas differ based on the calculation type.
Where:
- Base Amount = Price before GST
- GST Amount = Tax amount calculated
- Total Amount = Final price including GST
- GST Rate = Applicable tax rate percentage
This calculator handles both scenarios automatically based on your selection.
GST Components and Slabs
GST Components
GST in India has three main components:
- CGST (Central GST): Collected by the Central Government on intra-state sales
- SGST (State GST): Collected by the State Government on intra-state sales
- IGST (Integrated GST): Collected by the Central Government on inter-state sales
GST Slabs
India has four primary GST tax slabs:
- 5%: Essential items like food grains, medicines
- 12%: Processed foods, computers, mobile phones
- 18%: Most goods and services (standard rate)
- 28%: Luxury items, sin goods, automobiles
Additionally, some items are taxed at 0% (exempted) or special rates for specific goods.
GST Split for Intra-State vs Inter-State
For intra-state transactions (within the same state), GST is split equally between CGST and SGST. For inter-state transactions (between different states), only IGST is applicable.