What is GST?
Goods and Services Tax (GST) is a unified indirect tax introduced in India on 1 July 2017. It replaced 17 separate central and state taxes — including VAT, service tax, excise duty, and entry tax — with a single, destination-based tax.
The core idea: tax is collected at every stage of the supply chain, but only on the value added at each stage. This eliminates the “tax on tax” problem of the old system.
The Three Types of GST
CGST — Central Goods and Services Tax
Collected by the central government on intra-state (within the same state) sales of goods and services.
SGST — State Goods and Services Tax
Collected by the state government on intra-state sales. CGST and SGST are always equal — each is exactly half the total GST rate.
Example: On an 18% GST transaction within Maharashtra, you pay 9% CGST (to Centre) + 9% SGST (to Maharashtra).
IGST — Integrated Goods and Services Tax
Charged on inter-state transactions — when the supplier and buyer are in different states, or on imports. The full tax goes to the central government, which then transfers the state’s share to the destination state.
Example: A Delhi supplier selling to a Bengaluru buyer at 18% GST pays 18% IGST, not CGST + SGST.
The 5 GST Slabs
| Rate | What it covers |
|---|---|
| 0% | Essential food items (rice, wheat, milk, eggs), healthcare, education |
| 5% | Basic necessities — edible oils, sugar, spices, tea, coffee |
| 12% | Processed food, computers, business-class air travel |
| 18% | Most services, packaged food, chemicals, capital goods |
| 28% | Luxury goods — cars, AC, tobacco, aerated drinks |
Some items also attract a cess on top of GST — for example, luxury cars and tobacco.
How to Calculate GST
GST Amount = Base Price × (GST Rate / 100)
Total Price = Base Price + GST Amount
Example: Product costs ₹1,000 before tax, 18% GST
GST = ₹1,000 × 0.18 = ₹180
Total = ₹1,180GST on an Invoice — Breakdown
A typical B2B invoice will show:
Intra-state transaction (CGST + SGST):
| Line item | Amount |
|---|---|
| Taxable value | ₹10,000 |
| CGST @ 9% | ₹900 |
| SGST @ 9% | ₹900 |
| Total | ₹11,800 |
Inter-state transaction (IGST):
| Line item | Amount |
|---|---|
| Taxable value | ₹10,000 |
| IGST @ 18% | ₹1,800 |
| Total | ₹11,800 |
Input Tax Credit (ITC)
One of GST’s most important features is Input Tax Credit. A registered business can deduct the GST it paid on its inputs from the GST it collects on its sales — effectively paying tax only on the value it added.
A manufacturer buys raw materials for ₹1,000 + ₹180 GST, and sells the product for ₹2,000 + ₹360 GST. It pays only ₹360 − ₹180 = ₹180 net GST to the government.
Calculate GST Now
Use our GST Calculator to instantly compute CGST, SGST, or IGST for any amount — whether you’re adding tax to a base price or removing it from an inclusive total.