How to Calculate GST in India — Forward & Reverse Calculation, CGST vs SGST vs IGST

India's GST system has 4 main tax slabs: 5% (essential goods, economy class air travel, medicines), 12% (processed food, business class travel, certain textiles), 18% (most services, electronics, restaurant food AC), 28% (luxury items, automobiles, tobacco, cement). Plus special rates: 0%, 0.1%, 0.25%, and 3% for specific items.

GST has 3 components: CGST (Central GST) goes to the union government, SGST (State GST) goes to the state government, and IGST (Integrated GST) applies to inter-state transactions and goes to the center which then distributes to states. For intra-state transactions: 18% GST = 9% CGST + 9% SGST. For inter-state transactions: 18% GST = 18% IGST.

As a consumer, you pay the combined rate (CGST + SGST) but the split is handled by the seller in their GST returns. When you see 'GST 18%' on a restaurant bill, it's split equally between centre and state.

Adding GST to a base price: GST Amount = Base Price × GST Rate ÷ 100. Total Price = Base Price + GST Amount. Example: Product price ₹10,000, GST 18%: GST = ₹10,000 × 18% = ₹1,800. Total = ₹11,800. CGST = ₹900, SGST = ₹900.

For a B2B invoice, you show: Base price ₹10,000 + CGST ₹900 + SGST ₹900 = Total ₹11,800. The buyer can claim input tax credit on the ₹1,800 GST paid, which offsets their own GST liability on sales.

Composite scheme: small businesses with turnover below ₹1.5 crore can opt for composite scheme paying flat 1% (traders), 5% (restaurants), 6% (service providers) of turnover as quarterly tax, with simplified compliance. Trade-off: cannot collect GST from customers or claim input tax credit.

When price is GST-inclusive: Base Price = Total Price ÷ (1 + GST Rate ÷ 100). GST Amount = Total Price − Base Price. Example: MRP ₹11,800 includes 18% GST: Base = ₹11,800 ÷ 1.18 = ₹10,000. GST = ₹1,800. This is called 'reverse calculation' or 'backward calculation'.

Common use case: you're a business buying something at MRP and want to know the taxable base for input credit. Or you're calculating your margin after GST on retail sales.

Mistake to avoid: many people divide by the GST percentage directly (₹11,800 ÷ 1.18 is correct; NOT ₹11,800 × 18% = ₹2,124 which overcounts). Always use 1 + (rate/100) as the divisor.