India GST explained: rates after the 2025 reform

By Zulu Calculator · Updated 19 October 2026 · Money

Since the GST reform of 22 September 2025, most goods and services in India are taxed at one of two main rates: 5% or 18%. A 40% rate applies to luxury and "sin" goods, and special rates of 3% and 0.25% remain for gold and diamonds. To add GST, multiply the price by 1 plus the rate. To take it out of an inclusive price, divide by 1 plus the rate. So ₹10,000 plus 18% GST is ₹11,800, and ₹11,800 with GST taken out is back to ₹10,000.

This guide covers the current rates, both formulas, how the tax splits into CGST and SGST or IGST, and how invoices with several items, discounts and input tax credit work. To skip the maths, use the India GST calculator with your own amounts.

What are the GST rates in India now?

The September 2025 reform (often called "GST 2.0") cut most goods and services down to two main slabs. Here is how the rates look now, with typical examples:

Two other changes matter. First, the old compensation cess has been removed from almost all goods. Tobacco products now carry central excise instead. Only add a cess to your sums if your invoice actually shows one. Second, the rate depends on the exact product or service, not just the broad group above. The table is a guide to typical items. For an invoice or a return, confirm the rate for your HSN or SAC code on the GST portal or with a tax professional.

How do I add GST to a price?

Start with the price before GST. Work out the tax, then add it on.

GST = price × rate ÷ 100
total = price × (1 + rate ÷ 100)

At 18%, that means multiply by 1.18. At 5%, multiply by 1.05. At 40%, multiply by 1.40. So ₹10,000 at 40% is ₹4,000 of GST and ₹14,000 in total.

How do I remove GST from an inclusive price?

If a price already includes GST, you cannot just take the rate off the total. The GST was worked out on the lower, pre-tax price, so you have to divide back.

price before GST = total ÷ (1 + rate ÷ 100)
GST inside the total = total − price before GST

For ₹11,800 at 18%: 11,800 ÷ 1.18 = ₹10,000, so the GST inside is ₹1,800. If you took 18% of ₹11,800 instead, you would get ₹2,124, which is ₹324 too much. This is the most common GST mistake.

Adding and removing GST on ₹10,000 at each rate

The first two columns treat ₹10,000 as the price before GST. The last two treat ₹10,000 as a total that already includes GST.

Notice that the GST inside a total is always less than the rate times that total. At 18%, GST is 18 ÷ 118, or about 15.25%, of the inclusive price.

What is the difference between CGST, SGST and IGST?

It depends on where the buyer and seller are, not on how much tax is due. The total GST is the same either way.

• Sale within one state: the GST is split equally between the central government (CGST) and the state (SGST). In a union territory, the state half is called UTGST. At 18%, that is 9% CGST plus 9% SGST.
• Sale from one state to another: the whole amount is charged as integrated GST (IGST). At 18%, that is 18% IGST.

On ₹10,000 at 18%, a sale within the state shows ₹900 CGST and ₹900 SGST. The same sale to a buyer in another state shows ₹1,800 IGST.

How does GST work on an invoice with several items?

Each item is taxed at its own rate. You work out the GST line by line, then add up the lines. It helps to add a summary by rate: the taxable value at each rate and the tax on it.

taxable value = price × quantity × (1 − discount ÷ 100)
GST on each line = taxable value × rate ÷ 100
invoice total = sum of taxable values + sum of GST

If your invoice shows a cess as well, it is worked out on the same taxable value: total = taxable value × (1 + (GST rate + cess rate) ÷ 100).

Is GST charged before or after a discount?

After. GST is charged on the price after any discount shown on the invoice, not on the list price. So take the discount off first, then work out GST on what is left.

If you are a seller and start from your cost, add your profit margin first, then GST. A cost of ₹800 with a 25% margin sells at ₹1,000 before GST, or ₹1,050 with 5% GST.

What is input tax credit?

A registered business pays GST on the things it buys and collects GST on the things it sells. Input tax credit lets it set the first against the second, so it only pays the difference.

GST to pay = GST collected on sales − GST paid on purchases
if the credit is bigger, you pay nothing and the rest is carried forward

For example, collect ₹1,800 and claim ₹1,200 of credit, and you pay ₹600. The detailed rules on which purchases qualify are not covered here. Check them on the GST portal or with a tax professional.

Small businesses in the composition scheme work differently. They pay a flat rate on turnover instead: 1% for traders and manufacturers, 5% for restaurants and 6% for some service providers. They cannot charge GST on their invoices or claim input tax credit.

Worked examples

Example 1: adding and removing 18% GST

You sell a service for ₹10,000 before GST to a customer in your own state.

• GST: 10,000 × 18 ÷ 100 = ₹1,800.00
• Split: ₹900.00 CGST (9%) and ₹900.00 SGST (9%)
• Total: 10,000 + 1,800 = ₹11,800.00

Now go the other way. A customer has paid ₹11,800 including 18% GST, and you need the price before tax:

• Price before GST: 11,800 ÷ 1.18 = ₹10,000.00
• GST inside: 11,800 − 10,000 = ₹1,800.00

The same works at 5%: a ₹5,250 bill including 5% GST is 5,250 ÷ 1.05 = ₹5,000.00 before tax, with ₹250.00 of GST (₹125.00 CGST and ₹125.00 SGST).

Example 2: three items with a 10% discount

You sell 3 items at ₹1,000 each, at 18% GST, and give a 10% discount. The sale is within your state.

• List price: 3 × 1,000 = ₹3,000.00
• Discount: 3,000 × 10% = ₹300.00
• Taxable value: 3,000 − 300 = ₹2,700.00
• GST: 2,700 × 18 ÷ 100 = ₹486.00 (₹243.00 CGST and ₹243.00 SGST)
• Total: 2,700 + 486 = ₹3,186.00

If you had wrongly charged GST on the full ₹3,000, the tax would be ₹540, which is ₹54 too much.

Example 3: two rates on one invoice, sold to another state, with input tax credit

You send one invoice to a buyer in another state: ₹2,000 of goods at 18% and ₹1,000 of goods at 5%. You paid ₹300 of GST on your own purchases for these goods.

• Invoice total: 3,000 + 410 = ₹3,410.00
• All of the tax is IGST, because the buyer is in another state
• GST to pay: 410 − 300 = ₹110.00

If the same buyer were in your own state, the ₹410 would show as ₹205 CGST and ₹205 SGST instead. And if your credit had been ₹500, you would pay nothing and carry ₹90 of credit forward.

Common mistakes

• Taking the rate off an inclusive price. 18% of ₹11,800 is ₹2,124, not the ₹1,800 of GST inside it. Divide by 1.18 instead.
• Charging GST on the list price. GST goes on the price after the discount shown on the invoice.
• Using old rates. Since 22 September 2025, the main slabs are 5% and 18%, with 40% for luxury and sin goods.
• Adding a cess out of habit. The compensation cess has been removed from almost all goods. Only include one if your invoice shows it.
• Thinking IGST costs more. IGST and CGST plus SGST add up to the same total. Only the split changes.
• Charging GST in the composition scheme. Composition dealers pay a flat rate on turnover and cannot charge GST or claim credit.

What if I am not sure which rate applies?

1. Find the code. Look up the HSN or SAC code for what you sell. The rate follows the exact product or service, not just the broad group it belongs to.
2. Check the official rate. Look up that code on the GST portal. Rates changed in September 2025, so older lists may be out of date.
3. Check your invoices. If a supplier's bill shows a rate or a cess you did not expect, ask them which code they used.
4. Ask a professional for filings. For returns, credit claims or anything unusual, a tax professional can confirm the rules for your business. This guide is general information, not tax advice.

Quick summary

• Since 22 September 2025: main slabs 5% and 18%, 40% for luxury and sin goods, 3% for gold, silver and jewellery, 0.25% for rough diamonds, and many essentials exempt.
• Add GST: total = price × (1 + rate ÷ 100).
• Remove GST: price = total ÷ (1 + rate ÷ 100). Never take the rate off the total.
• Within a state, GST splits equally into CGST and SGST (or UTGST). Between states, it is all IGST.
• GST goes on the price after any discount. Each item on an invoice is taxed at its own rate.
• Input tax credit lets a registered business pay only the difference between GST collected and GST paid.

Working out your own tax too? Try the India income tax calculator. Paid GST late? The India GST interest calculator works out the interest. Selling outside India? The sales tax calculator adds or removes tax at any rate.

Rates checked against the GST Council's September 2025 rate changes, as used by our calculators (checked 9 October 2026).

This guide explains the rules in plain English for planning. It is not legal, financial or flight-operations advice; check your contract, the official source linked above, your employer or your operator.