How to Add or Remove 18% Sales Tax from a Price

To add 18% sales tax, multiply the price by 1.18. To remove 18% sales tax from a price that already includes it, divide by 1.18. For example, Rs 10,000 plus tax is Rs 11,800, and a tax-inclusive price of Rs 10,000 is Rs 8,474.58 before tax.

Pakistan’s standard general sales tax rate on goods is 18%. Some goods carry reduced rates or exemptions, and sales tax on services is set separately by each province, so check the rate that applies to your item.

Exclusive vs inclusive prices

• Tax-exclusive price: the price before tax. Tax is added on top. Quotations and supplier invoices often look like this.
• Tax-inclusive price: the amount you actually pay, tax already inside. Retail shelf prices and printed retail prices usually work this way.

Mixing these up is the source of most errors, so always note which one you start with.

The formulas

• Tax on an exclusive price = price × 0.18
• Inclusive price = exclusive price × 1.18
• Exclusive price = inclusive price ÷ 1.18
• Tax inside an inclusive price = inclusive price × 18 ÷ 118 (about 15.25% of it)

For any rate, replace 0.18 with rate ÷ 100 and 1.18 with 1 + rate ÷ 100.

Quick table at 18%

Read the first three columns when the price is tax-exclusive, and the last two when it already includes tax.

The common mistake

Many people remove tax by taking 18% off the inclusive price. That gives the wrong answer. On Rs 11,800, subtracting 18% gives Rs 9,676, but the correct pre-tax price is 11,800 ÷ 1.18 = Rs 10,000. The tax was 18% of the pre-tax amount, not of the total, so you have to divide. Our guide to calculating percentages explains this reverse-percentage idea in more detail.

A worked invoice

A supplier quotes 40 units at Rs 1,250 each, excluding tax. The value of supplies is 40 × 1,250 = Rs 50,000. Sales tax at 18% is Rs 9,000, and the invoice total is Rs 59,000.

Now a retail receipt: you paid Rs 2,950 for an item with tax included. The pre-tax price is 2,950 ÷ 1.18 = Rs 2,500, and the tax inside is Rs 450.

In a spreadsheet and on invoices

In Excel or Google Sheets, with the price in A2, use =A2*1.18 to add tax, =A2/1.18 to remove it and =A2-A2/1.18 for the tax inside an inclusive price. Wrap results in =ROUND(…,2) so totals match to the paisa. On a multi-line invoice, work out tax on the total of the lines, or round each line consistently, so the tax figure on the invoice agrees with the rate shown. Small differences of a rupee or two usually come from rounding at different steps.

Sales tax on services

Under Pakistan’s constitution after the 18th Amendment, sales tax on services is collected by the provinces through their own revenue authorities: the Punjab Revenue Authority, Sindh Revenue Board, Khyber Pakhtunkhwa Revenue Authority and Balochistan Revenue Authority, with the federal government covering Islamabad. Their rates differ by service and can change in each budget, so look up the current schedule for the service in question. The arithmetic is identical; only the rate changes.

VAT in other countries

Many countries call it value added tax (VAT), but the maths is the same. Standard rates for a few common ones, with what a 1,000 price becomes:

Rates do change, and many goods have reduced or zero rates, so confirm with the official tax authority before filing or quoting.

The tax calculator adds or removes any rate in one step, and the percentage calculator handles discounts and markups. If you sell abroad, the currency converter is useful for quotes.

Frequently asked questions