About the GST / VAT calculation
Adding tax and removing it are not symmetric operations, and that asymmetry catches people out constantly. Taking 18% off a tax-inclusive price does not recover the pre-tax amount — you have to divide by 1.18, not multiply by 0.82. This page shows both directions at once.
Formula
Adding tax: Gross = Net × (1 + rate/100)
Removing tax: Net = Gross ÷ (1 + rate/100)
Tax amount = Gross − NetWorked example
Adding 18% to 1,000: 1,000 × 1.18 = 1,180, of which 180 is tax. Removing 18% from 1,180: 1,180 ÷ 1.18 = 1,000. Subtracting 18% of 1,180 instead would wrongly give 967.60.
Frequently asked questions
Why can I not just subtract the percentage?
Because the tax was calculated on the smaller pre-tax figure, not on the total. Subtracting 18% of the gross removes 18% of a larger number and overshoots. Division by 1.18 is the correct inverse.
What are the Indian GST slabs?
The main rates are 5%, 12%, 18% and 28%, with 0% on many essentials and special rates on a few categories such as precious metals. The rate depends on the specific goods or services being supplied.
What is the difference between CGST, SGST and IGST?
For a supply within one state, the total GST splits evenly into central GST and state GST. For a supply across state lines, a single integrated GST is charged at the full rate instead. The amount payable is the same either way.
Does this work for VAT or sales tax?
Yes. The arithmetic is identical for any percentage-based consumption tax. Enter your local rate — UK VAT at 20%, for instance — and both directions work the same way.
Sources
- Standard ad-valorem tax arithmetic