GST Calculation in Invoices and Billing
How to correctly calculate and display GST on invoices — B2B vs B2C rules, reverse charge, and examples.
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Tags: GST on invoices, GST invoice calculation, GST billing guide
GST Calculation in Invoices and Billing GST invoice requirements in India are governed by the CGST Act 2017. The GST Council sets rates, and the GSTN e-invoicing portal handles B2B electronic invoice registration. For international context, the OECD VAT/GST guidelines cover cross-border GST treatment. Getting GST right on an invoice is not optional — an invoice with incorrect GST amounts or missing mandatory fields can disqualify your customer's Input Tax Credit (ITC) claim, trigger disputes, and invite scrutiny during audits. This guide covers the mechanics of GST calculation for every common billing scenario. --- All the tools discussed here are available for free at theproductguy.in — client-side, no sign-up required. What is The Two Types of GST Invoices? Before calculating anything,…
Frequently Asked Questions
What GST information is required on an invoice?
A valid GST invoice must include: GSTIN of the supplier, invoice number and date, name and address of recipient, GSTIN of recipient (for B2B), HSN/SAC code, description of goods or services, taxable value, GST rate and amount (CGST + SGST for intra-state or IGST for inter-state), and total amount including GST. Missing any of these can make the invoice ineligible for ITC claims.
How do I calculate GST on a B2B invoice?
For intra-state B2B transactions, split GST equally between CGST and SGST. For a product with 18% GST: CGST = 9% and SGST = 9%. For inter-state transactions, charge IGST at the full rate (18%). In both cases, the taxable value is the pre-GST price and the final invoice amount is taxable value + total GST. The recipient can claim Input Tax Credit on the GST paid.
What is reverse charge GST?
Under reverse charge mechanism (RCM), the recipient of goods or services is liable to pay GST instead of the supplier. This applies in specified categories — for example, services received from an unregistered supplier, goods like raw cotton, or certain legal and security services. When RCM applies, the recipient raises a self-invoice and pays GST directly to the government.
How do I handle GST for exports?
Exports are zero-rated under GST — either export with payment of IGST (and claim a refund) or export under a Letter of Undertaking (LUT) without paying IGST. The tax invoice for exports must state 'SUPPLY MEANT FOR EXPORT UNDER LUT WITHOUT PAYMENT OF IGST' and include the shipping bill number. Exporters are also entitled to refund of input tax credit on inputs used.
What is the difference between IGST, CGST, and SGST?
CGST (Central GST) and SGST (State GST) are levied on intra-state transactions — both the central and state governments collect equal portions. IGST (Integrated GST) is levied on inter-state transactions and imports — it is collected by the central government and later apportioned to the destination state. The total rate is the same regardless of which type applies.
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