VAT & GST glossary

Net

The price before tax is added. Also called the VAT-exclusive or pre-tax amount.

Gross

The price after tax is added — what the customer pays. Also called the VAT-inclusive amount.

Output VAT

VAT you charge on your own sales and pass on to the tax authority.

Input VAT

VAT you pay on business purchases, which you may be able to reclaim against the output VAT you owe.

Standard rate

The default rate that applies to most goods and services (for example 20% in the UK, 19% in Germany).

Reduced rate

A lower rate applied to specific categories, such as some food, energy or cultural items.

Zero-rated

Charged at 0%, but still a taxable supply — so it counts towards registration thresholds and can be reclaimed differently from exempt items.

Exempt

Outside the scope of VAT. You do not charge VAT, and you usually cannot reclaim input VAT on related costs.

Reverse charge

A rule where the buyer, not the seller, accounts for the VAT — common on cross-border business-to-business services.

CGST / SGST / IGST (India)

Central GST, State GST and Integrated GST. Intra-state sales are typically split equally into CGST and SGST; inter-state sales use IGST.

GST

Goods and Services Tax — the same mechanism as VAT under a different name, used in countries such as India, Australia, Canada, New Zealand and Singapore.

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