GST Exclusive (Entered amount does not include GST rate)
GST Inclusive (Entered amount include GST rate)
GST Rate:
5%
12%
18%
28%
GST Amount
Total GST Amount
GST Exclusive (Entered amount does not include GST rate)
GST Inclusive (Entered amount include GST rate)
5%
12%
18%
28%
GST Amount
Total GST Amount
Goods and Services Tax which is abbreviated as GST in the form of tax that has been imposed by the Government of India at the national level. Several GST Calculators are available on online websites which can be used to determine the GST cost.
The GST levied by the Government of India on the sellers, manufacturers, and consumers of goods and services at a national level.
GST is derived from the concept of Value Added Tax (VAT) which means that it is applied at each stage and the consumer is supposed to pay the GST amount which is charged by last dealer or the supplier in the supply chain.
Under the new tax structure, taxpayers can learn about different GST rates applicable at different categories. These are 0%, 5%, 12%, 18% and 28%, these are necessary while calculating GST.
Different tax heads under GST:
GST can be categorised in four different heads such as
IGST is applied to interstate products where the supplier of the product is in different state and the product is supplied in a different state. In such a case, an equal rate of CGST and SGST is levied for interstate supplies.
For calculating GST, following mentioned formula can be used by the taxpayer. Following formula helps to calculate net price of the product after application of GST and removing GST as well.
The formula for GST calculation:
1. Add GST:
GST Amount = (Original Cost x GST%)/100
Net Price = Original Cost + GST Amount
2. Remove GST:
GST Amount = Original Cost – [Original Cost x {100/(100+GST%)}]
Net Price = Original Cost – GST Amount.
Let’s assume that a product is sold for Rs. 2,000 and GST applicable to that product is 12 %.
Then the net price of the product becomes Rs. 2,000 + 12% of Rs.2,000.
This comes out as Rs. 2,000 + Rs. 240 = Rs. 2,240
Input tax credit can benefit manufacturers and dealers under the GST scheme. Following table shows a comparison between the old tax system and GST tax system
Below is an example to show the difference in the amount of tax payable under the old tax system and the GST system:
Value to Manufacturer |
Old Tax system |
GST System |
Cost of production |
Rs.2,00,000 |
Rs.2,00,000 |
Profit Margin of 10% |
Rs.20,000 |
Rs.20,000 |
Excise duty of 12% |
Rs.24,000 |
– |
Total production cost |
Rs.2,44,000 |
Rs.2,20,000 |
VAT of 12.5% |
Rs.30,500 |
– |
SGST of 6% |
– |
Rs.13,200 |
CGST of 6% |
– |
Rs.13,200 |
Invoice value for manufacturer |
Rs.2,74,500 |
Rs.2,46,400 |
Value to Wholesaler |
||
Cost of goods |
Rs.2,74,500 |
Rs.2,46,400 |
Profit margin of 10% |
Rs.27,450 |
Rs.24,640 |
Total Value |
Rs.3,01,950 |
Rs.2,71,040 |
VAT of 12.5% |
Rs.37,743.75 |
– |
SGST of 6% |
– |
Rs.16,262.40 |
CGST of 6% |
– |
Rs.16,262.40 |
Invoice value to wholesaler |
Rs.3,39,693.75 |
Rs.3,03,564.80 |
Value to Retailer |
||
Cost of goods |
Rs.3,39,693.75 |
Rs.3,03,564.80 |
Profit margin of 10% |
Rs.33,969.375 |
Rs.30,356.48 |
Total Value |
Rs.3,73,663.125 |
Rs.3,33,921.28 |
VAT of 12.5% |
Rs.46,708 |
– |
SGST of 6% |
– |
Rs.20,035.28 |
CGST of 6% |
– |
Rs.20,035.28 |
Invoice value to retailer |
Rs.4,20,371.125 |
Rs.3,73,991.84 |
Central and State Government is called Central GST (CGST) and State GST (SGST), respectively levies indirect tax. For intra-state transactions, the seller will charge buyer taxes such as CGST and SGST which is to be paid to the Central and State Government, respectively. Below is an example of such type of GST which shows the impact of GST on product pricing:
Old Tax System | GST System |
Price of a product sold from Nagpur to Hyderabad = Rs.1,000 | Price of a product sold from Nagpur to Hyderabad = Rs.1,000 |
VAT @ 10% = Rs.100 | CGST @ 5% = Rs.50 + SGST @ 5% = Rs.50 |
Cost of a product sold from Nagpur to Hyderabad = Rs.1,100 | Cost of a product sold from Nagpur to Hyderabad = Rs.1,100 |
Profit = Rs.1,000 | Profit = Rs.1,000 |
Selling Price = Rs.2,100 | Selling Price = Rs.2,100 |
CST @ 10% = Rs.210 | IGST @ 10% = Rs.110 |
Total cost of the product = Rs.2,310 | Total cost of the product = Rs.2,210 |
Several online websites provide online GST calculator for the ease of users.
Following are some of the advantages of implementing GST on products. Implementing a single indirect tax has its own described benefits:
Following are the taxes which will be a set-off with the same or different tax input credits:
CGST | CGST and IGST |
SGST | SGST and IGST |
IGST | IGST, CGST and SGST |
GST came in force in 2017 and ever since so many changes are made in the it, which are implemented by passing these GST bills.
From January 1, under the goods and services tax (GST), enterprises with an annual turnover of over Rs 5 crore will have to shift to e-invoicing. By December the portal will be ready to deal with the increased capacity
The goal is to get all enterprises with turnover above Rs 1 crore under this framework by the next fiscal year to block revenue leakages and enhance abidance.
The GST Council had agreed to enforce electronic invoices in a sectioned manner. The purpose is to carry all the small enterprises under the standard economy. According to the GST Council, from January 1, e-invoicing will become mandatory for enterprises over Rs 5 crore turnover.
E-invoicing employs a standardized structure that a machine can read.
It will synchronize the sales database of small business owners and big corporate clients, which is utilized to declare tax credits. It will help quickly detect inaccurate ITC claims, broaden the GST base and enhance compliance.
From October 1, enterprises having annual turnover of Rs 10 crore and above have moved to e-invoicing for business-to-business (B2B) transactions.
Earlier e-invoicing was only compulsory for businesses with turnover of Rs 500 crore. This criteria was then reduced to enterprises with turnover of Rs 100 crore from January 1, 2021 onwards and again revised to businesses with a turnover of Rs 50 crore from April 1, 2021. From April 2022, it was expanded to enterprises with turnover above Rs 20 crore.
News Updated Date: 31st October 2022