Prices with GST: inclusive or on top?
Quote a price that does not lose you the tax, and work GST out of a price that already includes it.
5 min read
Every price you quote is one of two things: a price before GST, with the tax added on top, or a price that already includes GST. Mix the two up and the tax comes out of your margin instead of your customer's pocket. This lesson is the arithmetic, and the habit that stops it happening.
Two ways to say the same price
- Exclusive — "₹1,000 + GST". The customer pays ₹1,000 plus the tax.
- Inclusive — "₹1,180, inclusive of GST". The customer pays ₹1,180, and the tax is already inside it.
At 18%, those are the same deal. The trouble starts when you say "₹1,000" and mean one while the customer hears the other.
Adding GST to a price
price before tax × (1 + rate) = price the customer pays
A made-up example at 18%: ₹1,000 × 1.18 = ₹1,180. The GST is ₹180.
Taking GST out of an inclusive price
This is the one people get wrong. You cannot take 18% off the inclusive price.
inclusive price ÷ (1 + rate) = price before tax
Same example backwards: ₹1,180 ÷ 1.18 = ₹1,000. The GST is ₹1,180 − ₹1,000 = ₹180.
18% of ₹1,180 is ₹212, not ₹180. Taking the rate off the inclusive price overstates the tax and understates what you actually earned. Always divide by (1 + rate); never multiply by the rate.
Which one to quote
It depends on who buys.
| Your customer | What they care about | Quote |
|---|---|---|
| A household | The total they pay; they can't claim it back | Inclusive — the price on the shelf is the price |
| A registered business | The price before tax; they claim the GST back | Exclusive — "₹X + GST" is normal |
Households compare the number on the tag. Businesses compare the number before tax, because that is their real cost.
Where the money goes missing
You quoted inclusive by accident
You tell a customer "₹1,000" thinking of your cost-plus price, then raise a tax invoice. If they insist ₹1,000 was the full amount, your share is only ₹1,000 ÷ 1.18 = ₹847. You have lost ₹153 on one sale.
You changed your price but not your tag
If you are newly registered and keep your old shelf prices, the GST now comes out of what you used to keep. That may be the right choice for the market — but make it on purpose, with the sum in front of you.
Write it on every quote, every time: "inclusive of GST" or "+ GST". Four words settle the argument before it starts.
Rounding
Work the tax out per line, then round the final total. Rounding each step separately can leave your invoice a rupee or two off from what the customer worked out, and that is enough to start a dispute with a careful buyer.
Not registered?
If you are not registered for GST, you don't charge it — so there is nothing to add or take out. But the GST your suppliers charge you is part of your cost, so make sure your price covers it.
The GST calculator below does both directions at every rate, and shows the CGST/SGST or IGST split.