One tax on goods and services
The Goods and Services Tax (GST) replaced most indirect taxes in India in July 2017. It is charged at each stage of sale, but each business deducts the GST it paid on its own purchases, so in the end the tax falls on the final buyer.
The rates
Since 22 September 2025, most goods and services fall into two main rates:
- 5% for essentials and many everyday goods.
- 18%, the standard rate for most goods and services.
- 40% for a short list of luxury and "sin" goods, such as large cars and aerated drinks.
Some items are exempt or nil-rated, gold and silver are taxed at 3%, and rough diamonds at 0.25%. The old 12% and 28% rates were folded into these.
CGST, SGST and IGST
- Within one state: the tax is split in half between the central government (CGST) and the state (SGST). 18% GST is 9% CGST plus 9% SGST.
- Between states: the whole amount is integrated GST (IGST), collected by the centre and shared with the state where the goods are used.
Calculating it
To add GST, multiply by 1 plus the rate: ₹1,000 at 18% is ₹1,180. To take it out of an inclusive price, divide: ₹1,180 ÷ 1.18 = ₹1,000, so the GST is ₹180. The GST Calculator does both and splits the tax into CGST and SGST or shows it as IGST. For other countries' VAT, use the VAT Calculator.