# In spend-based Scope 3, do I remove GST and adjust for inflation and currency before applying factors?

Canonical: https://senseible.earth/answers/spend-based-scope-3-gst-inflation-currency

Yes, all three. Use the taxable value before GST, convert rupees to the factor's currency, and deflate to the factor's base year, because spend factors are per unit of money in a stated currency and year. Skipping these steps can overstate emissions by 20% or more.

## Why GST comes out

GST is a tax, not a payment for goods produced, and most businesses claim it back as input tax credit. Spend-based factors are built from economic output, so they expect a price without taxes. On an 18% GST item, using the invoice total overstates the line by 18%. Take customs duty out for the same reason.

## Matching the factor's currency and year

- US EPA USEEIO factors are in US dollars of a stated year, given with and without trade and transport margins.
- EXIOBASE gives factors by country and sector, including India, in euros of a stated year at basic prices.
- Convert rupees using the average exchange rate for the year of spend, then deflate to the factor's base year with a price index, or deflate in rupees first and convert at the base-year rate. Pick one order and keep it every year.

## There is no official Indian factor set

India has no government-published spend-based emission factors. A US factor describes how US industry makes the product, and an EXIOBASE India factor is a modelled average. Both are rough. Label spend-based results as estimates, and replace the biggest lines with quantity-based or supplier data first.

## Other cleaning steps

- Remove freight charged on the same invoice if you count it in Category 4.
- Remove intra-group transfers and items already counted elsewhere, such as fuel in Scope 1.
- Use the 'with margins' factor when your spend includes the trader's and transporter's share, which is usually the case for a purchase price.

## Worked example: Rs 10 lakh of packaging (illustrative figures)

- Invoice total Rs 11,80,000 = taxable value Rs 10,00,000 + GST at 18% Rs 1,80,000
- Use the taxable value: Rs 10,00,000
- Convert at an assumed average rate of Rs 85 per USD: 10,00,000 / 85 = USD 11,765
- Deflate to the factor's base year, assuming 10% cumulative US price change: 11,765 / 1.10 = USD 10,695
- Apply an assumed factor of 0.5 kg CO2e per USD: 10,695 x 0.5 = 5,348 kg CO2e, about 5.3 tonnes
- Using the GST-inclusive total at the same steps would give about 6.3 tonnes, 18% too high

Exchange rate, price change and factor are assumptions for illustration; take the real values from the factor dataset's documentation.

## What Senseible does here

Senseible reads the taxable value and GST as separate fields on each invoice line, so the pre-tax amount is available. It does not apply spend-based factors; its Scope 3 trail calculates only from printed quantities and approved factors and marks other lines as needing data.

- [Scope 3 Category 1, spend-based](https://senseible.earth/answers/scope-3-category-1-spend-based)
- [Spend-based vs activity-based Scope 3](https://senseible.earth/climate-intelligence/spend-based-vs-activity-based-scope-3-method-choice)
- [How to fill gaps in Scope 3 data](https://senseible.earth/answers/how-to-fill-gaps-in-scope-3-data)

Sources: [GHG Protocol Technical Guidance for Calculating Scope 3 Emissions v1.0 (2013), Category 1](https://ghgprotocol.org/corporate-value-chain-scope-3-standard), [US EPA Supply Chain GHG Emission Factors for US Commodities and Industries (USEEIO)](https://www.epa.gov/climateleadership)

Last reviewed 2026-10-15.