Amount

1 lac

2 Cr

INR

GST Exclusive (Entered amount does not include GST rate)

GST Inclusive  (Entered amount include GST rate)

GST Rate:

5%

12%

18%

28%

Goods and Services Tax which is abbreviated as GST is the form of tax which has been imposed by the Government of India at 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.

Method to calculate GST using the GST calculator:

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

  1. State Goods and Services Tax (SGST): State Government collects this tax
  2. Central Goods and Services Tax (CGST): Central Government collects this tax
  3. Union Territory Goods and Services Tax (UTGST): Union Territory Government collects this tax
  4. Integrated Goods and Services Tax (IGST). It is collected by the Central Government for inter-state transactions and imports.

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.

GST Calculation Formula:

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.

GST calculation Example:

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

Calculation of Tax under GST:

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

Impact on Product Pricing of GST:

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

Method to use Online GST calculator tools:

Several online websites provide online GST calculator for the ease of users.

  1. Select GST Inclusive / GST exclusive option as required by the user.
  2. Enter the original amount of the product.
  3. Select GST percent rate applicable on the product.
  4. Click on “Calculate” option to calculate the final amount of the product.

Merits of GST:

Following are some of the advantages of implementing GST on products. Implementing a single indirect tax has its own described benefits:

  1. This tax structure helps in maintaining an international standard. It also helps in ensuring transparency between the manufacturer and consumer.
  2. The main motto behind GST implementation is the eradication of double taxation on commercial goods. It promotes the competition amongst manufacturers and sellers to provide high-quality goods which in turn helps to boost the GDP of the country.
  3. Reduction in tax brings down the production cost for manufacturers which in turn increases competition amongst exporters.
  4. After the implementation of GST, the most vital issue of inflation in the market is assumed to decrease.
  5. It is also believed that there will be a decrease in tax liability. As input tax is available against output tax, reduction in price is expected.

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 Bills:

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.

GST Calculator FAQ’s:

A. Would an ISD needs to obtain registration?

ISD is needed to obtain compulsory registration under GST in a state or UT from where he makes taxable supply of goods or services or both.

B. Who decides rates to impose GST?

The CGST and SGST rates are jointly decided by Centre and States.

C. What is need of dual GST?

In India, both the Centre and the States are assigned with the powers to levy and collect the taxes. Both the Governments have distinct responsibilities for which they need to raise resources. A dual GST keeps the requirement of fiscal federalism.

D. Which authority levy and administrates GST?

Centre will levy and administer CGST and SGST whereas states/ UT will levy and administer SGST/UTGST.

E. If dealer is migrated with incorrect PAN in the case, if the status of firm is changed from proprietorship to partnership?

New registration is needed as partnership will have new PAN

F. As liquor is not included in GST law, whether the trader of the country liquor is required to migrate to GST from VAT?

No registration is required if the person is involved with supply of goods not liable for GST