Whether you're pricing a product, checking a receipt, or preparing an invoice, GST (Goods and Services Tax) — or VAT in countries that use that name instead — comes down to a couple of very simple formulas. The part people usually get stuck on isn't adding tax to a price; it's going the other direction, working backwards from a tax-inclusive total to figure out what the original price and the tax amount actually were. Here's both directions, with worked numbers.

Adding GST to a Price (Tax-Exclusive → Tax-Inclusive)

This is the straightforward direction: you have a base price, and you need to add tax on top of it.

Tax Amount = Base Price × (GST Rate / 100) Final Price = Base Price + Tax Amount

For example, a product priced at ₹1,000 with 18% GST:

Tax Amount = 1000 × (18 / 100) = ₹180 Final Price = 1000 + 180 = ₹1,180

Reverse GST: Finding the Original Price from a Tax-Inclusive Total

This is the calculation people search for far more often, usually while staring at a receipt or a quoted "all-inclusive" price and needing to know how much of it is actually tax. The trick is that you can't just take 18% of the total — that overstates the tax, because the total already includes it. Instead, divide by (1 + rate):

Base Price = Total Price / (1 + GST Rate / 100) Tax Amount = Total Price − Base Price

Using the same 18% rate on a tax-inclusive total of ₹1,180:

Base Price = 1180 / (1 + 18/100) = 1180 / 1.18 = ₹1,000 Tax Amount = 1180 − 1000 = ₹180

Notice this correctly recovers the exact ₹1,000 base price and ₹180 tax from the earlier example — proving the two formulas are true inverses of each other. A common mistake is taking 18% of ₹1,180 directly (which gives ₹212.40, too high), instead of dividing by 1.18 first.

Applying a Discount and GST Together

When both a discount and tax apply to the same purchase, order matters. Standard retail and invoicing practice applies the discount first, then calculates GST on the already-discounted amount — not on the original price.

Discounted Price = Original Price × (1 − Discount% / 100) Tax Amount = Discounted Price × (GST Rate / 100) Final Price = Discounted Price + Tax Amount

For a ₹2,000 item with a 10% discount and 18% GST:

Discounted Price = 2000 × (1 − 10/100) = ₹1,800 Tax Amount = 1800 × (18/100) = ₹324 Final Price = 1800 + 324 = ₹2,124

Applying GST before the discount instead would produce a different (higher) final price — which is why the order matters for anyone checking an invoice line by line.

CGST + SGST: The India-Specific Split

Under India's GST system, tax on a sale within the same state is split evenly into two components shown separately on invoices: Central GST (CGST) and State GST (SGST), each set at exactly half the total GST rate. An 18% GST charge, for instance, appears on the invoice as 9% CGST plus 9% SGST rather than a single 18% line — the total payable is identical either way, but the split is a compliance requirement for intra-state invoicing. This split is specific to India; if you're calculating VAT or sales tax elsewhere, the base and reverse formulas above apply as-is and the CGST/SGST breakdown simply doesn't apply.

Why the Reverse Calculation Trips People Up

The most common error in GST math is treating the reverse calculation like the forward one — taking a straight percentage of the total instead of dividing by (1 + rate). It's an easy mistake because the forward formula (multiply, then add) feels like it should just run in reverse the same way (subtract, then divide by the same percentage), but tax-inclusive totals don't work that way, since the percentage itself was calculated on a smaller, pre-tax base. Keeping the two formulas — one multiplying up, one dividing down — clearly separate is the simplest way to avoid the error.