GST Inclusive vs Exclusive: What's the Difference?
Understanding the difference between inclusive and exclusive pricing is vital for both business owners and consumers. It affects how you quote prices, how you understand discounts, and how you calculate your tax liability.
1. GST Exclusive (Base Price)
This means the tax is NOT yet added to the price. This is common in B2B transactions where businesses quote the "base rate" and then add GST on top. For example, if a product is ₹1000 + 18% GST (Exclusive), the final price will be ₹1180.
2. GST Inclusive (MRP)
This means the tax is ALREADY included in the final price (MRP). This is common in retail (B2C). If a product is ₹1000 (Inclusive) at 18%, the base price is actually ₹847.46 and the tax is ₹152.54.
How to Extract GST from Total?
To find the original base price from a GST-inclusive total, use this formula:
Base Price = Total Price / (1 + (GST Rate / 100))