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Most businesses overestimate their profit because they forget to deduct GST from the selling price. Enter your cost price, selling price, and GST rate to see your actual gross margin, net margin, and markup percentage.
Your purchase/manufacturing cost
Amount charged to customer (GST included)
Here's a scenario every small business owner has experienced: you buy a product for ₹800 and sell it for ₹1,180. You think you're making ₹380 profit — a healthy 47.5% markup. But wait — that ₹1,180 includes 18% GST.
Your actual base selling price is ₹1,000 (₹1,180 ÷ 1.18). Your real profit is only ₹200 — a 20% gross margin on the base price. The ₹180 GST goes straight to the government. You never get to keep it.
This calculator strips out the GST and shows you what you're actually earning. If you're pricing products without this clarity, you might be running at a loss without knowing it — especially in low-margin businesses like FMCG, grocery, or trading.
Gross Margin
Profit as a percentage of selling price. Formula: (Profit ÷ Selling Price) × 100.
₹200 profit on ₹1,000 sale = 20% margin
Markup
Profit as a percentage of cost price. Formula: (Profit ÷ Cost Price) × 100.
₹200 profit on ₹800 cost = 25% markup
A 25% markup sounds better than a 20% margin — but they represent the exact same rupee profit. The confusion between these two is one of the most common pricing errors in Indian businesses. When a supplier says "20% margin" and you hear "20% markup", you're pricing your product wrong.
Base Price = Cost Price ÷ (1 − Target Margin / 100)
GST-Inclusive Price = Base Price × (1 + GST Rate / 100)Example: You want a 30% gross margin on a product that costs ₹700, with 18% GST.
❌ Calculating profit on GST-inclusive price
✓ Always remove GST first. Your profit is on the base price, not the invoice total. GST collected is the government's money, not yours.
❌ Confusing margin with markup when negotiating
✓ When a buyer says "give me 15% margin", they mean 15% of selling price — not 15% above your cost. Clarify which metric is being discussed.
❌ Ignoring ITC when calculating cost
✓ If you can claim ITC on your purchases, your effective cost is the pre-GST amount. Factor this into your cost price for accurate margin calculation.
❌ Not accounting for different GST rates on inputs vs outputs
✓ If your input GST is higher than output GST (inverted duty), you accumulate ITC — effectively reducing cost. If lower, your real tax outflow is higher.
Calculate your actual profit margin after GST. Enter cost price, selling price, and GST rate to see your real gross margin, net margin, and markup percentage. Understand the difference between margin and markup, and price your products correctly to maintain target profitability.
⚠️ Disclaimer: All calculations are for reference only. Verify with gst.gov.in or consult a qualified CA before filing returns.