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Goods and Services Tax (GST) has reshaped India's tax landscape, unifying different indirect taxes and simplifying the system. This comprehensive system of taxation impacts businesses, requiring a nuanced understanding of GST calculation. From diverse tax slabs to compliance requirements, understanding how to calculate GST plays an important role in financial decision-making. This article helps you understand the GST calculation formula, how to use the GST calculator, and other aspects of the GST regime.
GST, is a indirect tax, levied on the supply of goods and services in India. GST was first introduced in 2017 as a single taxation system that replaced the different types of indirect taxes present in the country. Indirect taxes that were abolished include octroi, entry tax, VAT, and Central Excise Duty.
GST can be called a comprehensive tax levied on the consumption, sale, and manufacturing of goods and services in the country. Whether small or large, all organizations are required to have a GST identification number to get registered under the GST Act. While integrated GST is charged on inter-state sales (within the state), central GST and state GST are levied on intra-state sales.
There are different types of GST collected by the government. Here’s a list -
GSTIN, or goods and services identification number, is a 15-digit alphanumeric code assigned to every person registered under the GST Act. GSTIN is a PAN-based number that consists of a registration number, entity code, state code, etc.
GSTIN is used for various purposes like filing returns, making payments, and claiming input credits. It also helps ensure compliance and transparency in tax evasion and the GST system.
There are various ways to calculate the amount of GST liability on the supply of goods and services. The best way to do so is to use a GST calculator to find out the GST rates applicable to the goods and services for the month or quarter based on the types of products.
Given below is the formula for calculating GST for the taxpayer -
When you want to add GST -
GST Amount = (Original cost x GST %)/100
Net Price = Original Cost + GST Amount
When you want to remove GST -
GST Amount = Original Cost - [Original cost x {100/(100+GST%)}]
Net Price = Original Cost - GST Amount
Follow the below-mentioned steps to calculate the GST amount -
Suppose a product is sold at Rs.5,000, and this product falls under the 18% GST slab rate.
In this case, the net price payable for the product will be Rs.5,000 + 18% of Rs.5,000 = Rs.5,000 + 900 = Rs.5,900.
A GST calculator is an online tool that is ready to use and helps you figure out how much GST you owe for a quarter or a month, depending on the GST slab in which the goods fall. Using a GST calculator online
Given below are some of the benefits of using a GST calculator -
As the landscape of GST significantly influences economic pathways, understanding these aspects becomes essential. If you have any queries, it is best to seek professional assistance. Tax2win’s tax experts can act as your guide in all matters related to GST.
GST inclusive amount refers to the total cost of goods and services, including the amount of GST payable on it. Understanding the GST-inclusive amount helps individuals plan their finances strategically by factoring in the additional cost of GST.
GST exclusive amount refers to the total value of goods and services, excluding factoring in the additional cost of GST. Calculating the GST-exclusive amount helps identify the total expenditure while making purchases.
