GST (General Sales Tax) and VAT (Value Added Tax) are consumption taxes charged on the sale of goods and services. For business invoices and pricing, you need to calculate tax correctly — both adding it to prices and extracting it from totals.
Adding Tax to a Price (Ex-Tax → Inc-Tax)
Tax amount = Base price × (Tax rate ÷ 100) Final price = Base price + Tax amount
| Base price | GST 18% | Tax amount | Total |
|---|---|---|---|
| Rs 10,000 | 18% | Rs 1,800 | Rs 11,800 |
| Rs 45,000 | 18% | Rs 8,100 | Rs 53,100 |
| Rs 500 | 18% | Rs 90 | Rs 590 |
Shortcut: multiply base price by 1.18 (or 1 + rate/100).
Extracting Tax From a Tax-Inclusive Price (Inc-Tax → Base)
Base price = Total price ÷ (1 + Tax rate ÷ 100) Tax amount = Total price − Base price
| Total (inc-tax) | GST 18% | Base price | Tax |
|---|---|---|---|
| Rs 11,800 | 18% | 11,800 ÷ 1.18 = Rs 10,000 | Rs 1,800 |
| Rs 59,000 | 18% | 59,000 ÷ 1.18 = Rs 50,000 | Rs 9,000 |
Common mistake: dividing by the tax rate (Rs 11,800 × 0.18 = Rs 2,124) is wrong. You must divide by (1 + rate) to extract correctly.
Invoice Presentation
For business-to-business invoices:
- List services/goods at the base (ex-tax) price.
- Show the tax rate applied.
- Show the tax amount.
- Show the total (base + tax).
For consumer retail, prices are often shown tax-inclusive with the tax breakdown available if requested.
Different Rates for Different Categories
In Pakistan, some categories carry reduced rates or zero-rating (exports, certain food items). Always confirm the applicable rate for your specific goods or services with FBR guidance or a tax advisor — using the wrong rate creates compliance problems.
Use GST/VAT Calculator for quick calculations on invoices and quotes. For broader business pricing including tax in your cost structure, see how to price a product for profit.
Pakistan's GST Context
Pakistan's General Sales Tax is administered by the Federal Board of Revenue (FBR). The standard rate is 18% as of 2026, with reduced rates for specific categories (agriculture, some food items) and zero-rating for exports. Businesses exceeding turnover thresholds must register as sales tax filers. Provincial sales taxes also apply to services (Punjab Revenue Authority, Sindh Revenue Board, etc.) at varying rates. For specific classification of your goods or services, always verify the applicable rate and filing requirements with FBR or a tax professional. GST/VAT Calculator handles the arithmetic once you have the correct rate.
