About GST and VAT
GST (Goods and Services Tax) and VAT (Value Added Tax) are both indirect taxes collected at each stage of a supply chain. The difference is mostly one of naming and scope โ countries like India, Australia, Canada, Singapore and New Zealand call it GST, while the UK, most of Europe and the Middle East call it VAT. Both do the same job: they tax the value added at each step, and the final consumer ultimately bears the cost.
GST replaced a tangled web of separate taxes in many countries โ in India, for example, GST in 2017 replaced central excise, service tax, VAT, and a dozen other levies with a single unified tax. The four main Indian slabs (5%, 12%, 18%, 28%) cover most goods and services, with a few special rates for gold and other items.
Adding tax (tax-exclusive)
When a price does not include tax, you add it on top:
Total = Base ร (1 + Rate)
Tax = Base ร Rate
For example, a $1,000 item at 18% GST: Tax = 1,000 ร 0.18 = $180, Total = $1,180.
Removing tax (tax-inclusive)
When a price already includes tax, you work backwards to find the base:
Base = Total รท (1 + Rate)
Tax = Total โ Base
For example, a $1,180 invoice at 18% GST: Base = 1,180 รท 1.18 = $1,000, Tax = 1,180 โ 1,000 = $180.
Common GST/VAT rates by country
| Country | Tax name | Standard rate | Reduced rates |
|---|---|---|---|
| India | GST | 18% | 0%, 5%, 12%, 28% |
| United Kingdom | VAT | 20% | 0%, 5% |
| Germany | VAT | 19% | 7% |
| France | VAT | 20% | 5.5%, 10% |
| Australia | GST | 10% | None |
| Canada | GST/HST | 5% / 13โ15% | None |
| Singapore | GST | 9% (from 2024) | None |
| UAE | VAT | 5% | None |
| Saudi Arabia | VAT | 15% | None |
| New Zealand | GST | 15% | None |
CGST, SGST and IGST in India
For sales within a single Indian state, GST is split into two equal halves:
- CGST โ Central GST, collected by the central government.
- SGST โ State GST, collected by the state government.
- IGST โ Integrated GST, collected by the centre for inter-state sales.
For example, at 18% GST within a state: CGST = 9%, SGST = 9%, and the total is the same as a single 18% charge โ just booked to two different authorities. Enable the "Split into CGST + SGST" option to see this breakdown.
Common use cases
Invoices
Add tax to line items before generating an invoice.
Receipts
Extract the base amount from a tax-inclusive receipt.
Retail Pricing
Work out the final price from a cost-plus-margin quote.
Cross-border Sales
Check IGST vs CGST+SGST treatment for inter-state orders.
Reverse Tax Calculation
Split a gross total into base and tax for bookkeeping.
Learn GST
See exactly how GST applies with worked examples.
Privacy and accuracy
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