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GST Calculator

What is GST in India?

The Goods and Service Tax Act was passed in India in 2017. It was introduced as a measure to integrate various indirect taxes in the country into one single taxation system. GST effectively made the tax network of the country more streamlined by replacing various taxes like VAT, service tax, excise duty, etc. GST in India can be defined as the tax that is levied on the supply of goods and services in the country. 

This is a multi-stage, comprehensive, destination-oriented tax system that is charged on every value addition. This way, the government has virtually created a single indirect tax to replace all of the indirect taxes in the country. Under the GST system, tax is applicable at every point of sale, beginning at the manufacturer, upto the final point of sale. Now let us understand the definition of GST in detail:

Multi-Stage

An item changes hands multiple times along the entire supply chain. It is a multi-stage taxation system that starts at the manufacturer up until the point of final sale. Given below are the stages of the supply chain where GST is applicable, making it multi-stage:

  • Purchase of raw materials meant for production
  • Manufacturing process
  • Storage and warehousing of finished products
  • Sale to wholesalers
  • Sale to retailers
  • End use sale

Value Addition

A manufacturer who makes bakery items purchases raw materials like sugar, flour, eggs, etc. The value of the product increases when the flour and other raw materials are mixed and baked into cakes. The initial manufacturer then sells the finished product to the warehousing and storage expert, who then subsequently packs the product in large quantities and labels them. This is another instance of value addition to the product. The warehousing expert then sells the product to the retailer.

The retailer then packs the cakes in small quantities and markets the product, subsequently increasing the value of the product. GST is chargeable at each instance of value addition. 

Destination  Based 

Let’s assume that the product is manufactured in Haryana, but is sold for final use in Delhi. The tax revenue from the sale will go to Delhi, because GST is levied on the point of consumption.

What are the Different Taxes Under GST?

The Goods and Services Tax is a multi-faceted system that is further divided into four different tax systems. Given below are the different types of GST applicable on the supply of goods and services:

Central Goods and Service Tax (CGST)

The CGST Act of 2017 makes a provision for the Central Government to collect taxes on the supply of goods and services within the state itself. The provision is applicable to all the states of the country with the exception of Jammu and Kashmir. The act is composed of 3 schedules, 21 chapters, and 174 sections. Given below are the three schedules of the act:

  • Schedule I: This schedule pertains to the treatment of activities as supply without any consideration
  • Schedule II: This schedule details all the activities that are to be considered as supply of goods and services
  • Schedule III: This schedule talks about all the activities that are not considered as supply of goods or services

State Goods and Service Tax (SGST)

The SGST Act empowers the state government to levy taxes on supply of goods and services from their states while the Central Government refrains from doing so. All other state taxes like Luxury Tax, States Sales Tax, Lottery Tax, Entertainment Tax, etc. that were applicable in the previous tax regime are now integrated into the SGTS Act of 2017. 

In case of intra-state supply of goods and services, equal parts of CGST and SGST are applicable on the buyer. While the CGST is received by the Central Government, the SGST is deposited with the respective state government.

Integrated Goods and Service Tax (IGST)

IGST is charged from buyers in the case of inter-state supply of goods and services, that is when the supply of goods and services occurs between two states or outside the state. Simply put, if the location of the buyer and seller are in different states, IGST will be applicable on the buyer. This is also applicable in other scenarios of inter-state transactions like import of goods and services where the transaction has been dealt by an SEZ unit. The taxes collected are then shared between the Central and State Governments in the pre-agreed proportions.

Union Territory Goods and Service Tax (UTGST)

Apart from the above mentioned three main types of GST, there is also something called UTGST. This tax is only applicable in the Union Territories of the country which include Delhi, Chandigarh, Daman and Diu, Dadra and Nagar Haveli, Lakhswapeed, and Puducherry. The characteristics of UTGST are similar to SGST and regulate the collection of taxes for transactions happening in the Union Territories. 

How is GST Calculated?

Now with the integrated taxation system, it is possible for taxpayers to know the amount of tax charged at different stages of goods and services supply. In order to know the GST calculation method, it is important to know the various GST slabs. 

GST Calculation Formula

Given below is the formula that a taxpayer can use to calculate the GST amount:

To Add GST to Base Amount

GST Amount = (Original Cost of the Product * applicable GST %)/100

Net Price = Original Cost + GST Amount

To Remove GST to Base Amount

GST Amount = Original Cost - (Original Cost*  (100 / (100 + GST% ) ) )

Net Price = Original Cost - GST Amount

GST Percentage in India

The applicable GST rate in India has been bifurcated into four different slabs- 5%, 12%, 18%, and 28%. The official GST council revises what is to be included under these rates in order to ensure accurate pricing of the different types of products.

The rate applied therefore depends on whether the goods or service is a luxury or necessity. Usually, necessities attract a lower rate of tax of 5% and 12%, and luxury products fall in the slab of 18% and 28% .

In addition to this, the GST rate on gold is 3% and 0.25% for semi-precious or rough gemstones. Also, there is a minor part of all goods and services that do not attract any taxation, including sanitary napkins and salt.

Understanding GST Calculation with Examples

The applicable GST can be calculated by simply multiplying the taxable amount with the appropriate GST rate. If SGST/UTGST/CGST is to be applied to the final transaction, then the amount is half of the original GST amount.

GST = Taxable Amount * GST Rate

If you know the net amount which is already inclusive of GST, then you can remove the GST amount from the total amount by using the below given formula:

GST excluding amount = GST including amount/(1+ GST rate/100)

Example: The original total amount inclusive of GST is INR 525 and the applicable GST is 5%

GST excluding amount = 525/(1+5/100) = 525/1.05

                                      = 500

Note: The GST is calculated on the transaction value and not the retail price. 

GST Calculation for Manufacturers

The table given below shows the GST Calculation for manufacturers in India:

Category GST Rate Before GST After GST
Product Cost - Rs. 10,000 Rs. 10,000
Excise Duty 12% Rs 1200 -
Profit 10% Rs 1,000 Rs. 1,000
Total Rs. 12,200 Rs. 11,000
VAT 12.50% Rs 1525 -
CGST 6% - Rs 660
SGST 6% - Rs 660
Final Invoice Rs 13,725 Rs. 12,320

According to the table given above, at a cost point of Rs. 10,000, the manufacturer saves Rs. 1,405. This results in a cost reduction for manufacturers, the benefit of which is eventually passed down to the wholesalers, retailers, and buyers.

GST Calculation for Wholesalers and Retailers

The table below shows the GST Calculation for wholesalers and retailers in the country:

Category GST Rate Before GST After GST
Product Cost - Rs 13,725 Rs 12,320
Profit 10% Rs 1,373 Rs 1,232
Total Rs 15,098 Rs 13,552
VAT 12.50% Rs 1,887 -
CGST 6% - Rs 813
SGST 6% - Rs 813
Final Invoice Rs 16,985 Rs. 15,178

How to Use the GST Calculator?

Urban Money offers the taxpayers a powerful dedicated GST calculator that simplifies all the complicated calculations. Given below are the steps to use the Urban Money GST Calculator:

Step 1: Select GST Inclusive/GST Exclusive according to your requirement.

Step 2: Enter the amount.

Step 3: Select the appropriate GST rate from the drop down menu.

Step 4: Click on the ‘Calculate’ button to view the result. You will be able to see the amount before and after GST is applied as per your requirement.

Frequently Asked Questions GST (FAQs)

How to calculate GST using a GST calculator?

All you will have to do is enter certain information like GST inclusive or exclusive amount, and select the applicable interest rate, the GST calculator will do the rest for you.

What is the formula for GST calculation?

The formula for GST calculation is GST = Taxable Amount * GST Rate.

Is the GSTIN mandatory?

Yes, GSTIN is mandatory if you want to claim GST credit. Without a GSTIN, an invoice will not be created for you.

What are the tax slabs under GST?

The different tax slabs in the GST are 5%, 12%, 18%, and 25%.

What is the GST Inclusive amount?

GST inclusive amount is basically the total value of the product after including the cost point and GST amount. In this case, the customer is not liable to be taxed.

What is the GST Exclusive amount?

GST exclusive amount means the value of the product after removing the GST amount from the GST inclusive amount.