Professional services
GST and VAT Calculator
Works GST or VAT, which a registered business collects and remits rather than bears.
Result
Removing tax means dividing by one plus the rate, not subtracting the rate. Taking 10% off a tax-inclusive 1,100 gives 990, which is wrong; dividing by 1.1 gives 1,000, which is right. The error grows with the rate and is one of the most common in bookkeeping.
Get a Free Business AuditHow the calculation works
Tax is charged on the sale at the applicable rate, and the registered business offsets the tax it paid on its own purchases against the tax it collected, remitting the difference. That is why it is a tax on value added: each stage pays only on the margin it created. Working backwards from a tax-inclusive price divides rather than multiplies, which is the arithmetic people most often get wrong.
What moves the number
- Whether the quoted price is tax-inclusive or tax-exclusive.
- The applicable rate, which varies by country and sometimes by category.
- Input tax on purchases, which offsets what is collected.
- Registration status, since an unregistered business neither charges nor reclaims.
Where this one goes wrong
Extracting tax from an inclusive price is a division, not a subtraction of the rate: at a 10% rate the tax inside a price of 110 is 10, not 11, because the 10% was applied to 100. Treating it as a subtraction overstates the tax and understates the net. The other point is that for a registered business this is a cash flow item rather than a cost, since the tax collected is held and remitted. Spending it before the remittance date is a common and painful mistake. Rates and registration thresholds are country specific; confirm them with your own tax authority.
Before you quote
- Be explicit about whether a price is inclusive or exclusive.
- Extract tax from an inclusive price by division, not subtraction.
- Hold collected tax rather than treating it as revenue.
Questions
About this calculator
How do I remove GST from an inclusive price?
By division rather than by subtracting the rate. At a 10% rate, the tax inside a price of 110 is 10 and not 11, because the 10% was applied to the 100 net. Subtracting the rate from the gross overstates the tax every time.
Is GST a cost to my business?
For a registered business, generally not. You offset tax paid on purchases against tax collected on sales and remit the difference, so it passes through. It is a cash flow item though, and money collected and spent before the remittance date has to be found again.
Does the United States have GST or VAT?
No. The US uses state and local sales tax, which is charged at the final sale rather than offset through the chain, and the rules differ by state and locality. GST and VAT systems are used in most other countries, with rates and thresholds set nationally.
The formula
add: amount x (1 + rate); remove: amount / (1 + rate)
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How to use this calculator
- Amount ($). Enter your own figure; the page starts at $1,000.
- Tax rate (%). Enter your own figure; the page starts at 10%.
- The amount is. Enter your own figure; the page starts at Before tax, add it.
The result updates as you type, so you can try a figure, see what it does to result, and change it back. Nothing you enter is sent anywhere or saved.
A worked example
These are the figures the calculator opens with. Every number in the results column below is produced by the same calculation the page runs, so you can follow it through before putting your own figures in.
What goes in
| Input | Value |
|---|---|
| Amount | $1,000 |
| Tax rate | 10% |
| The amount is | Before tax, add it |
What comes out
| Result | Value |
|---|---|
| Result main result | $1,100.00 |
| Tax | $100.00 |
| Before tax | $1,000.00 |
| Including tax | $1,100.00 |
| Divisor used to extract tax | 1.1 |
Adding 10 tax gives $1,100.00, of which $100.00 is tax.
How sensitive the answer is
Holding everything else steady and changing only amount, this is what happens to result. It is worth knowing which of your inputs the answer actually hinges on, and which barely move it.
| Amount ($) | Result |
|---|---|
| $500 | $550.00 |
| $750 | $825.00 |
| $1,000 example above | $1,100.00 |
| $1,500 | $1,650.00 |
| $2,000 | $2,200.00 |
Every other input is held at the example value while this one changes, which is not how a real job behaves. Treat it as a guide to which number matters most, not as five separate quotes.
What each figure means
- Amount ($)
- A money amount, starting at $1,000.
- Tax rate (%)
- A percentage, between 0 and 40, starting at 10%.
- The amount is
- Choose from Before tax, add it, Including tax, remove it.
What the results tell you
| Result | What it is |
|---|---|
| Result | The headline result. A money figure. |
| Tax | A money figure. |
| Before tax | A money figure. |
| Including tax | A money figure. |
| Divisor used to extract tax | A decimal figure. |
Estimating is the easy part
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