How to Calculate VAT and GST: Add or Remove Tax Correctly
The formulas to add VAT or GST to a price and remove it from a gross price, with worked UK, EU, India, Pakistan and UAE examples and the most common mistake.
By Browser Tools Team · · 3 min read
To add VAT or GST, multiply the price before tax by (1 + rate): at 20%, 100 becomes 120. To remove it, divide the price that includes tax by (1 + rate): 120 ÷ 1.2 = 100. Never subtract the percentage from the gross price; that gives the wrong answer. The VAT & GST Calculator does both instantly.
What are the VAT and GST formulas?
VAT (value-added tax), GST (goods and services tax) and most sales taxes use the same maths:
- Gross price = net price × (1 + rate)
- Net price = gross price ÷ (1 + rate)
- Tax amount = gross − net, or net × rate
Write the rate as a decimal: 20% = 0.20, 5% = 0.05, 18% = 0.18.
Worked examples
| Country and rate | Net (before tax) | Tax | Gross (with tax) |
|---|---|---|---|
| UK VAT 20% | 100.00 | 20.00 | 120.00 |
| Germany VAT 19% | 250.00 | 47.50 | 297.50 |
| UAE VAT 5% | 1,000.00 | 50.00 | 1,050.00 |
| Pakistan sales tax 18% | 10,000.00 | 1,800.00 | 11,800.00 |
| India GST 18% | 5,000.00 | 900.00 | 5,900.00 |
| Australia GST 10% | 80.00 | 8.00 | 88.00 |
Removing tax works backwards. A UK receipt shows 120 including 20% VAT: 120 ÷ 1.20 = 100 net and 20 VAT.
Why is "take 20% off" wrong?
It's the most common VAT mistake. 20% of 120 is 24, and 120 − 24 = 96. But 96 + 20% = 115.20, not 120. The tax was added to the net price, so you have to divide to undo it.
A quick way to check: the tax share of a gross price is rate ÷ (1 + rate). For 20% VAT, that's 0.2 ÷ 1.2 = 1/6 of the gross price. For 5%, it's 1/21.
How do you use the calculator?
- Open the VAT & GST Calculator.
- Under I want to, choose Add tax (you have a price before tax) or Remove tax (you have a price that includes tax).
- Enter the amount.
- Pick a Tax rate. Presets include UK, several EU countries, India GST, Pakistan sales tax, UAE and Saudi VAT, Australia GST and Canada GST, or choose Other rate… and type any rate.
- Read the price with or without tax, the tax amount, and the net and gross figures.
It works in any currency and runs in your browser.
Which rate should you use?
Rates change, and many countries have more than one:
- UK: 20% standard, 5% reduced, 0% for some goods.
- EU: each country sets its own standard rate (for example 19% in Germany, 21% in Spain and the Netherlands, 23% in Ireland) plus reduced rates.
- India: GST has several slabs, and the rate structure was simplified in 2025. Check the current CBIC rate list for your product or service.
- Pakistan: 18% is the general sales tax rate on goods; services are taxed by the provinces at their own rates.
- Gulf: UAE VAT is 5%; Saudi Arabia's is 15%.
The presets are common standard rates. Always check your tax authority's current list, linked in the sources below. This guide is not tax advice.
How do you show VAT on an invoice?
Show three lines: the subtotal before tax, the tax with its rate, and the total. For example:
- Subtotal: 900.00
- VAT (20%): 180.00
- Total: 1,080.00
Add your VAT or GST registration number if you're registered. The Invoice Generator has a tax name and rate field that does this for you; see our guide on how to make an invoice.
Should prices include tax?
- Selling to consumers: in the UK, EU, India, Australia and many other places, prices shown to consumers must usually include tax.
- Selling to businesses: prices are often quoted before tax, with VAT added on the invoice.
- US sales tax is usually added at checkout and varies by state and city.
Whichever you use, say clearly whether a price includes tax.
How does tax affect your profit?
Work out your margin on the price without tax. The VAT or GST you collect isn't income; you pass it on to the tax office. If a product sells for 120 including 20% VAT and costs you 60, your real margin is (100 − 60) ÷ 100 = 40%, not 50%. The Profit Margin Calculator helps here, and our guide on margin vs markup explains the difference.
Quick summary
- Add tax: net × (1 + rate).
- Remove tax: gross ÷ (1 + rate).
- Tax inside a 20% VAT price = 1/6 of it.
- Check the current rate with your tax authority.
Do it in one click with the free VAT & GST Calculator, or use the Percentage Calculator for other percent sums.
Frequently asked questions
How do I add 20% VAT to a price?
Multiply the net price by 1.20. For example, 100 × 1.20 = 120, of which 20 is VAT.
How do I remove 20% VAT from a price?
Divide the gross price by 1.20. For example, 120 ÷ 1.20 = 100, so the VAT is 20. Taking 20% off 120 (giving 96) is wrong.
What is the formula for GST?
It's the same as VAT: gross = net × (1 + rate), net = gross ÷ (1 + rate), tax = gross − net. Only the rate changes.
Are the preset rates always current?
They are common standard rates, but rates change and many countries have reduced rates for some goods. Always check your tax authority's current rate list.
Sources
- #vat
- #gst
- #tax
- #small business