How GST/VAT is calculated (the simple formulas)

GST (Goods and Services Tax) and VAT (Value Added Tax) are consumption taxes added to many purchases. The math is straightforward, but there’s one place people often trip: adding tax uses a simple percentage, while removing tax uses a division by (1 + rate) because the tax is already baked in.

Use this when you have a net price (before tax) and want the final total. Let: N = net amount, r = tax rate as a percent.

• Tax amount: T = N × (r / 100)
• Gross total: G = N + T = N × (1 + r / 100)

Example: Net ₹1,000 with 18% GST. Tax = 1,000 × 0.18 = ₹180. Gross = 1,000 + 180 = ₹1,180. This is the “most intuitive” case because we’re literally adding a percentage of the net.

Use this when you have a gross total (tax included) and want the base amount. Let: G = gross amount, r = tax rate as a percent.

• Net amount: N = G ÷ (1 + r / 100)
• Tax amount: T = G − N

Example: Gross ₹1,180 with 18% GST. Net = 1,180 ÷ 1.18 = ₹1,000. Tax = 1,180 − 1,000 = ₹180. The division matters because the gross already includes the tax uplift.

People often ask: “What percent of the final price is tax?” That’s the effective tax share: Tax share = T ÷ G × 100%. Note: this is not the same as the GST/VAT rate unless you’re comparing against the net amount.

For example, with 20% VAT: if Net = 100, Gross = 120, Tax = 20. Tax share = 20/120 = 16.67%. So “20% VAT” means “tax is 20% of net,” but it’s 16.67% of the final total. This is useful for price comparisons and explaining invoices in plain language.

What this GST/VAT calculator does behind the scenes

When you press Calculate, the tool reads your mode (Add vs Remove), the amount, the rate, and your rounding preference. Then it applies the correct formula:

• Add mode: treats your amount as net, computes tax as a percent of net, then adds it.
• Remove mode: treats your amount as gross, divides by (1 + rate) to find net, then subtracts to get tax.
• Rounding: rounds displayed results to 0–4 decimals, while keeping full precision internally for consistency.

The results card shows a compact breakdown that’s easy to screenshot or paste into a chat. If you click Save Breakdown, it stores the latest summary in your browser’s local storage (only on your device). That’s useful for comparing multiple quotes: for example, different vendors, different tax rates, or different “tax included” receipts.

The share buttons generate a short text snippet (amount, rate, net, tax, gross) and open the relevant platform share URL. If your device supports it, Share uses the native share sheet.

If you want to work fast: type values, then press Enter to calculate. Use Clear to reset. Switch Add ↔ Remove to flip direction.

Real-world examples (with quick checks)

You have a service quote of ₹2,500 before tax. Rate is 18%. Tax = 2,500 × 0.18 = ₹450. Gross = 2,500 + 450 = ₹2,950. Quick check: 10% is 250, 8% is 200, so 18% is 450. Checks out.

A receipt shows €72.00 (tax included) and VAT rate is 20%. Net = 72 ÷ 1.20 = €60.00. Tax = 72 − 60 = €12.00. Quick check: 20% of 60 is 12, so gross should be 72. Perfect.

With 20% VAT, the tax is 16.67% of the final total. Why? Because the final total includes the tax. Using the example above, 12/72 = 0.1667 = 16.67%. If a friend says “VAT is 20% of what I pay,” the clearer statement is: “VAT is 20% of the base price, and 16.67% of the final total.”

Some invoices round each line item, others round only the final total. If your numbers are slightly off by a cent, it’s usually rounding policy. Use the rounding dropdown to match the currency you’re using, and remember: if the seller calculates tax per line item, your “one-lump-sum” estimate can differ by a tiny amount.

Frequently Asked Questions

• What’s the difference between GST and VAT?

  They’re both consumption taxes added to goods and services. Countries use different names and rules, but the math for a single price is the same: apply a percentage to the net amount to get tax, then add it to get gross.

• Why is removing tax not just “gross − (gross × rate)”?

  Because the rate is defined as a percent of the net, not a percent of the gross. If tax is already included, you must divide by (1 + rate) to recover the base. Using subtraction would under-estimate the net.

• What is “effective tax share” and why should I care?

  It answers: “How much of the final price is tax?” This helps compare tax-heavy totals, explain receipts, or estimate the portion of a bill that is tax versus product/service cost.

• Does this work for multiple tax rates or exemptions?

  This calculator assumes one flat rate on one amount. Real invoices can have multiple line items with different rates, exemptions, or special rules. For those, split the invoice into parts (or use a dedicated invoice calculator).

• Can I use this as an official tax calculator?

  It’s great for everyday estimation, shopping decisions, and quick checks. For filings, invoices, and compliance, confirm with your local requirements and accounting rules.

• Do you store my numbers?

  No server storage. All calculations run in your browser. If you click Save Breakdown, it’s stored only in your browser’s local storage on this device and can be cleared anytime.