GST Calculation: Adding, Removing and Why Division Is Not Subtraction
How to add GST to a price and how to extract it from an inclusive total — the divide-by-1.18 rule, with worked examples.
2026-09-20 · Tax
Adding GST
Base × (1 + rate). A 100,000 base at 18% invoices at 118,000.
Removing GST
Divide, never subtract. 118,000 ÷ 1.18 = 100,000 base, so the GST inside is 18,000. Subtracting 18% of 118,000 gives 96,760 — 3,240 too low.
Why the error is common
The two directions look symmetric. They are not: one multiplies by 1.18, the other divides by it, and division by 1.18 is not multiplication by 0.82.
Which rate applies
The standard federal rate in Pakistan is 18%. Provinces levy their own sales tax on services, and some goods sit at reduced rates — confirm what your invoice says before filing.
How do I find the GST in an inclusive price?
Multiply the inclusive amount by rate ÷ (100 + rate). At 18% that is ×0.1525.
Is GST the same as VAT?
Economically yes; the arithmetic is identical.
Do I charge GST on a zero-rated export?
Usually at 0%, but the invoice must still show the rate and the reason.
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