GST vs VAT: What's the Difference?
GST and VAT are both consumption taxes charged on the value added to a good or service. The maths is nearly identical — the real differences are the country, the rates, and how businesses reclaim the tax.
GST
Goods and Services Tax — a consumption tax used in India, Australia, New Zealand, Canada, Singapore, and others.
total = price × (1 + GST rate)VAT
Value Added Tax — a consumption tax used across the UK, the EU, and many other countries, applied at each stage of supply.
total = price × (1 + VAT rate)Side by side
| GST | VAT | |
|---|---|---|
| Full name | Goods and Services Tax | Value Added Tax |
| Where it applies | India, Australia, New Zealand, Canada, Singapore | UK, EU and most of Europe, and many other countries |
| Typical rates | 0%, 5%, 12%, 18%, 28% (India) | 5%–27%, commonly 20–23% |
| How it's collected | A single rate on the final sale | At each stage of the supply chain |
| Adding it to a price | price × (1 + rate) | price × (1 + rate) |
Worked example
Inputs: Price 10,000
GST @ 18%: 1,800 tax, 11,800 total
VAT @ 20%: 2,000 tax, 12,000 total
The mechanic is identical — add or remove a rate from a price. Only the rate and the country differ.
When to use GST
Use GST when you're pricing or invoicing for India, Australia, or another GST country, where a single rate typically applies to the final sale.
When to use VAT
Use VAT when you're pricing into the UK, the EU, or any VAT country. Businesses reclaim VAT at each stage, so the net cost depends on where you sit in the chain.
The short answer
For a simple add-or-remove calculation, GST and VAT are the same formula with different rates. The differences that matter are the country's rules and how the tax is reclaimed.
Run the numbers
Frequently asked questions
Quick answers before you start.
Is GST the same as VAT?
In mechanic, largely yes — both tax the value added to a sale. The difference is the country and its rates. GST is a single-rate-on-final-sale system in India and several other countries, while VAT is a staged system common across Europe.
How do I add GST or VAT to a price?
Multiply the price by one plus the rate. At 18% GST, 10,000 becomes 11,800; at 20% VAT, 10,000 becomes 12,000.
How do I remove GST or VAT from a price?
Divide the tax-inclusive price by one plus the rate. A price of 11,800 that includes 18% GST has a base of 10,000 and 1,800 of tax.