GST Before vs After Discount: Which Saves More Money in India?
Understanding the difference between applying GST before and after discount can save you significant money. Learn the calculation methods used by Indian retailers and find the best deals.
The Two Methods Explained
🅰️ Method A: Discount Before GST
- Apply discount to base price first
- Calculate GST on the discounted amount
- Add GST to get final price
Usually better for customers!
🅱️ Method B: Discount After GST
- Add GST to base price first
- Calculate total with tax included
- Apply discount to the gross amount
Sometimes used in retail scenarios
Real Example: Buying a Laptop in India
Scenario: Laptop costs ₹50,000 (base price), 18% GST, 10% discount
Method A (Discount Before GST):
Base Price: ₹50,000
Discount (10%): ₹50,000 - ₹5,000 = ₹45,000
GST (18% on ₹45,000): ₹45,000 × 0.18 = ₹8,100
Final Price: ₹45,000 + ₹8,100 = ₹53,100
Method B (Discount After GST):
Base Price: ₹50,000
GST (18%): ₹50,000 × 0.18 = ₹9,000
Gross Price: ₹50,000 + ₹9,000 = ₹59,000
Discount (10%): ₹59,000 - ₹5,900 = ₹53,100
Final Price: ₹53,100
When Does It Make a Difference?
🔍 Flat Amount Discounts
The difference becomes significant with flat amount discounts (like ₹500 off) rather than percentage discounts:
Example: ₹10,000 item, 18% GST, ₹1,000 flat discount
Method A (Better):
Base: ₹10,000
Discount: ₹10,000 - ₹1,000 = ₹9,000
GST: ₹9,000 × 0.18 = ₹1,620
Final: ₹10,620
Method B:
Base: ₹10,000
GST: ₹10,000 × 0.18 = ₹1,800
Gross: ₹11,800
Final: ₹10,800
Indian GST Rates Quick Reference
| GST Rate | Product Categories | Examples |
|---|---|---|
| 0% | Essential items | Fresh fruits, vegetables, milk |
| 5% | Necessary goods | Sugar, tea, coffee, medicines |
| 12% | Standard goods | Mobile phones, computers, books |
| 18% | Most common rate | Electronics, appliances, clothing |
| 28% | Luxury items | Cars, luxury goods, tobacco |
Key Takeaways for Smart Shopping
💡 Key Points:
- For percentage discounts: Both methods usually give the same result
- For flat amount discounts: "Discount before GST" is usually better
- Always ask retailers which method they use
- Use our GST calculator to compare both methods instantly
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