The Two Types of GST Billing
GST (Goods and Services Tax) seems simple—until you have to calculate it backwards. In business, you will encounter two types of bills: 1.GST Exclusive: The vendor quotes ₹1,000 + 18% Tax. You pay ₹1,180. This is common in B2B trades. 2.GST Inclusive: The vendor says "Pay ₹1,180 total." Here, the tax is already hidden inside the price. As a business owner, you need to extract the original price to know your true cost.
The Reverse Calculation Formula
Many people make the mistake of simply subtracting 18% from the total to find the original price. This is wrong. To find the actual price from an "Inclusive" amount, you must use the reverse formula: Original Price = Total Amount / (1 + (GST% / 100)) For example, if you paid ₹118 with 18% GST: 118 / 1.18 = 100. If you simply subtracted 18% of 118, you would get 96.76, which is incorrect! Our SutraBase GST Calculator handles this math instantly so you never overpay or under-report your taxes.
Why Accuracy Matters: Input Tax Credit (ITC)
: For businesses, accuracy is money. When you buy goods, the GST you pay can often be claimed back as Input Tax Credit (ITC) against the GST you collect from sales. If you miscalculate the GST component in an "Inclusive" bill, you might claim less credit than you deserve, losing money directly from your profit margin. Always use a reliable calculator to separate the Tax Component from the Principal Amount before filing your GSTR-3B.