GST Rates in India 2026: Complete Guide to GST Calculation
Understand the GST rate structure in India, how CGST, SGST and IGST are calculated, when you must register, and how to use a GST calculator correctly for your business.
The GST Rate Structure in India
Goods and Services Tax (GST) in India replaced a cascade of indirect taxes in July 2017. Most goods and services fall into one of four rate slabs: 5%, 12%, 18%, and 28%. Essential items are at 0%, and luxury items attract 28% plus a cess.
The slab an item falls in depends on its HSN or SAC classification. For example, packaged foods and restaurant bills (without alcohol) attract 5%, household items and air travel often fall at 12%, most services and electronics sit at 18%, and items like luxury cars and aerated drinks are at 28% plus cess.
CGST, SGST and IGST Explained
GST is split between the central and state governments. For an intra-state sale — where buyer and seller are in the same state — the tax is divided into CGST (Central GST) and SGST (State GST), each being half the total rate. An 18% intra-state tax therefore breaks into 9% CGST and 9% SGST.
For an inter-state sale, the tax is collected as a single IGST (Integrated GST) at the full rate. The central government collects it and passes the state portion to the destination state. This mechanism preserves the input tax credit chain across state borders.
GST-inclusive vs GST-exclusive Pricing
Two pricing methods exist. In GST-exclusive pricing, the displayed price excludes tax and tax is added at billing — the common method for B2B invoices and many services. In GST-inclusive pricing, the displayed price already contains the tax — the method used for most retail consumer goods.
The GST Calculator supports both. If you enter a base price, it computes the tax and the final amount. If you enter a GST-inclusive price, it extracts the tax component so you know the pre-tax base and the tax payable. A retailer who prices an 18% item at 118 rupees inclusive is charging 18 rupees of tax on a 100-rupee base — not 21.24 rupees.
When Must You Register for GST?
Businesses with annual turnover above the threshold — 40 lakh rupees for goods and 20 lakh rupees for services — must register for GST. Certain businesses must register regardless of turnover, including those making inter-state supplies, e-commerce sellers, and businesses under the reverse charge mechanism.
The GST Composition Scheme allows small businesses — turnover up to 1.5 crore (and 75 lakh for services) — to pay tax at a flat, lower rate instead of the normal slab rates, with simplified quarterly filing. The trade-off is that composition taxpayers cannot claim input tax credit on their purchases.
Input Tax Credit: The Heart of GST
Input tax credit lets a business offset the GST it paid on purchases against the GST it collects on sales, so tax is ultimately paid only on the value added. Without it, the same tax would be paid at every stage of the supply chain.
Keeping proper invoices is essential because the credit chain relies on the supplier's GST number, invoice, and filing. Using the GST Composition Calculator shows the flat-rate alternative; using the GST Calculator in reverse helps you check whether the GST your supplier charged is the correct slab for the goods.
Practical GST Calculation Example
A manufacturer sells goods worth 1 lakh rupees before tax at 18%. The GST is 18,000 rupees, split as 9,000 CGST and 9,000 SGST for an intra-state sale. The invoice shows a total of 1,18,000. If the manufacturer's own purchases carried 14,000 rupees of input credit, the net tax payable is only 4,000 rupees.
For the buyer who is a consumer, the 18,000 is a final cost. For the buyer who is a business, the same 18,000 becomes input credit against their own output tax. This single concept explains most GST questions — whether you are adding tax or reclaiming it depends on your role in the chain.
About the Author
The FinCalc Pro editorial team researches Indian personal finance tools and regulations to explain them with clear, accurate math.