GST

GST Calculator: A Step-by-step Guide To Calculating Your Goods and Services Tax

The article explains the significance of GST imposed on the sale value of goods and services. At the same time, it gives an idea to the readers about the step-by-step approach to calculating GST.

Guide To Calculating Your GST: Have you heard of Goods and Services Tax? In short, Goods and Services Tax is referred to as GST. It is a kind of Indirect tax imposed on the sale of goods and services at any given time.

When did GST come into existence?

Goods and Services Tax had been imposed on the sales of goods and services from July 1st 2017.  It is interesting to note that GST has become one of our country’s unique and single taxation systems. The Goods and Services tax had replaced all other indirect tax formats related to sales of goods and services in India.

How was the GST act put into place?

GST is a central government-approved format passed during the session related to the budget in 2017. The tax format was approved in the parliament on March 29th, 2017. As a result of GST, some of the indirect tax formats were abolished.

  • Central Excise Duty,
  • VAT,
  • Entry Tax and Octroi.

Snapshot of GST on a conceptual note

GST is considered a comprehensive tax imposed on the various product lifecycle components. GST is levied with the help of an identification number, which must be registered by a shop or a business owner under the purview of GST policy. The concept of GST is transaction based, i.e. its application is oriented to sale transactions happening on inter-state levels. Experts related to the field state that this is exactly where the concept of integrated GST comes into being. In the case of intra-state-based sales transactions, central GST, as well as State GST is imposed on the sale of a particular good or service.

Are there different forms of GST?

Different forms of GST which need to be understood relate to:

  • State GST (SGST): It is the tax that the State Government levies
  • Central GST (CGST): It is the tax that the Central Government levies
  • Integrated GST (IGST): It is understood to be collected by the Central Government based on the transactions related to the inter-state sale of goods or imports
  • Union Territory GST (UTGST): It is levied by Union Territory Government as per sale transactions happening in Union territories

How is GST calculated?

If you are a shop owner or a business owner, you must understand the kind of calculations that GST entail. To make fruitful calculations of GST, the taxpayer must understand the GST rates applicable in various sales categories. For the readers, it is important to know that there are different slabs applicable to GST calculations which are as follows:

  • 5%,
  • 12%,
  • 18% and
  • 28%.

It can be understood with a simple illustration:

If the price of goods or services remain to be at1,000 the GST rate applicable remains to be @ 18%. Therefore, the calculation will be 1,000+ (1,000X(18/100)) = 1,000+180 = 1,180.

How to add GST?

Adding GST can be done as follows:

  • GST Amount = ( Original Cost * GST% ) / 100
  • Net Price = Original Cost + GST Amount

How to remove GST from the base amount?

The following calculation can be followed to remove GST from the base amount:

  • GST Amount = Original Cost – (Original Cost * (100 / (100 + GST% ) ) )
  • Net Price = Original Cost – GST Amount

Before registering for GST, you can calculate your owed GST using our GST Calculator India.

Are there GST Calculation Tools?

Yes, many such digital firms exist in the market that offers the taxpayer a reliable method of GST calculation, applied and understood step-by-step. Consumers can use such tools on a digital platform to calculate the GST applicable to the sale price of a consumer good.

What are the steps to calculate GST through calculation tools?

Step 1: Click on the option of GST Inclusive/GST Exclusive as per the business requirement.

Step 2: Enter the original sale price on which GST needs to be calculated

Step 3: Click on the GST rate from the drop-down menu list and multiply it with the actual sale price

Step 4: Click on Calculate to check the result.

What is GST Inclusive amount?

GST inclusive amount calculates the sale value of the product, including GST. Therefore it is clear that the tax is not calculated separately.

What is GST Exclusive amount?

GST Exclusive amount refers to the product’s sale value only without the tax amount. Therefore, GST Exclusive amount must always be lesser than GST Inclusive amount.

Conclusion

The calculation of Goods and services tax needs to be done per the state government’s regulatory norm and/or the central government. However, the calculation and value of the GST amount shall vary in accordance with the product under consideration and the price or the value associated with the same.

Experts connected with the field of tax calculation agree that the imposition of GST remains at the rate of 18%, which needs to be calculated per the total sale value of the product and then added to the total amount. However, the rates of GST vary as per changes announced by the Government from time to time.

Therefore, the consumers are requested to keep a tab on the latest guidelines published by the Indian Government. Suppose you are willing to know more about the calculation of GST. In that case, you are requested to visit the website of Vakilsearch, a professional firm offering legal and tax consultancy in India.

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