GST inclusive vs exclusive price: which supplier quote is really cheaper?
By Raghav Saxena, founder of AsliRate, former audit associate at KPMG · 22 October 2026 · 2 min read
Short answer
To compare a GST-inclusive price with a GST-exclusive one, take the GST out of the inclusive price: divide it by (1 + GST rate). At 18%, ₹118 inclusive is ₹100 before GST. If you are GST-registered and can claim the credit, compare the before-GST figures. If you can't claim it, compare the full amounts you will pay.
One supplier writes "₹100 + GST". Another writes "₹115, GST included". The first looks ₹15 cheaper. For most GST-registered businesses, it is actually the more expensive one.
Step 1: take the GST out of the inclusive price
An inclusive price already contains the tax. To find the price before GST, divide by (1 + rate). At 18%, divide by 1.18. The GST inside the price is the difference.
| Inclusive price | ÷ 1.18 | GST inside it |
|---|---|---|
| ₹115.00 | ₹97.46 | ₹17.54 |
| ₹118.00 | ₹100.00 | ₹18.00 |
| ₹19.50 | ₹16.53 | ₹2.97 |
A common mistake is to take 18% off the inclusive price (₹115 × 0.82 = ₹94.30). That understates the price. GST is charged on the before-tax price, so you have to divide.
Step 2: decide whether the GST is a cost for you
If your business is GST-registered and the purchase is for your business, the GST you pay a registered supplier is usually claimed back as input tax credit. It leaves your bank account and comes back as a reduction in the GST you owe. So the real cost is the price before GST.
If you are not registered, or the supplier can't give you a valid tax invoice, the GST is simply part of the price. Then the full amount you pay is the cost.
Worked example
| Quote X | Quote Y | Cheaper | |
|---|---|---|---|
| You pay the supplier | ₹118.00 | ₹115.00 | Y |
| Registered buyer, after credit | ₹100.00 | ₹97.46 | Y |
| Unregistered buyer | ₹118.00 | ₹115.00 | Y |
| Comparing the numbers as written | ₹100 | ₹115 | X (wrong) |
Quote Y is cheaper for everyone. The only way X looks cheaper is by comparing a before-tax price with an after-tax one, which is what happens when quotes are lined up as written.
When an "inclusive" price needs a closer look
- No GSTIN on the quote. An unregistered supplier can't charge GST, so there is no credit to claim. Treat the whole price as cost and ask whether they will issue a tax invoice.
- Composition scheme suppliers issue a bill of supply, not a tax invoice. You can't claim credit on their price.
- Wrong rate assumed. GST rates were restructured in September 2025 into mainly 5% and 18%, with 40% for a narrow list of goods. Check the current rate for the item's HSN code before you divide.
- Freight inside the price. "Including GST and delivery" means freight is in there too. Good, but compare it with quotes where freight is extra by adding their freight before comparing.
Common questions
- How do I calculate the price without GST from an inclusive price?
- Divide the inclusive price by (1 + GST rate). At 18%, divide by 1.18: ₹118 becomes ₹100, and the GST inside it is ₹18.
- Is a GST-inclusive quote more expensive?
- Not necessarily. ₹115 including 18% GST is ₹97.46 before GST, which is cheaper than ₹100 + GST. Always convert both quotes to the same basis before comparing.
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