Simplest way to calculate GST for your business
GST (Goods and Services Tax) is a value-added tax levied on the supply of goods and services in many
countries, including India, Australia, and New Zealand. When dealing with GST, you may come across two
terms: GST exclusive and GST inclusive.
GST Exclusive: GST exclusive refers to the price of a product or service before GST is added. It
represents the base price of the item or service without the tax component. In other words, it is the
amount that the seller receives for the product or service, excluding the GST.
GST Inclusive: GST inclusive refers to the price of a product or service after GST is added. It
represents the total price that the buyer pays, including the GST. This is the amount that covers both
the base price of the item and the applicable GST.
GST Exclusive:
GST Payable = (Amount × GST Percentage) / 100
Total Amount = Amount + GST Payable
GST Inclusive:
GST Inclusive = (Amount × GST Percentage) / (100 + GST Percentage)
Pre GST Amount = Amount - GST Inclusive
Let's consider an example where the GST rate is 18%, and you want to calculate the GST payable and the GST-inclusive price for a product that costs ₹1,00,000 before tax.
To calculate the GST Exclusive:
| GST Payable | = (Amount × GST Percentage) / 100 |
| = (100000 × 18) / 100 | |
| = 18,000 |
| Total Amount | = Amount + GST Payable |
| = 100000 + 18000 | |
| = 1,18,000 |
Therefore, the GST Exclusive price for this product is ₹ 1,18,000.
To calculate the GST Inclusive:
| GST Inclusive | = (Amount × GST Percentage) / (100 + GST Percentage) |
| = (100000 × 18) / (100 + 18) | |
| = 1800000 / 118 | |
| = 15254.24 |
| Pre GST Amount | = Amount - GST Inclusive |
| = 180000 - 15254 | |
| = 84,746 |
Therefore, the GST Inclusive price for this product is ₹ 15254.24 and Pre GST Amount is ₹ 84,746.
