GST Calculator

GST stands for Goods and Services Tax which has been levied by the Government of India at the national level. Online GST calculators which are offered by several third-party websites can be used to ascertain the cost of GST which is applicable.

GST is the Goods and Services Tax levied by the government of India on the manufacturers, sellers, and consumers of consumer goods and services at the national level. It is based on the principle of Value Added Tax (VAT). As GST is levied on value addition at each stage, a consumer has to pay only the GST charged by the last dealer or supplier in the supply chain.

For more information, Check out related articles GST Registration and GST Returns

How to Calculate GST using a GST Calculator?

Taxpayers are now aware of the amount of tax charged at each point of supply for products and services thanks to the implementation of GST. When calculating GST, taxpayers must be aware of the GST rates applicable to different categories. Under the new tax structure, the rates applicable are 5%, 12%, 18% and 28%.

GST Calculation Formula

The below mentioned formula is for calculating GST by taxpayer

Formula for GST calculation:

  • Add GST:
  • GST Amount = (Original Cost x GST%)/100

    Net Price = Original Cost + GST Amount

  • Remove GST:
  • GST Amount = Original Cost - [Original Cost x {100/(100+GST%)}]

    Net Price = Original Cost - GST Amount

Example of GST Calculation

In case a product is sold for Rs.2,000 and the GST rate applicable to it is 12%, then net price of the product will be Rs.2,000 + 12% of Rs.2,000 = Rs.2,000 + Rs.240 = Rs.2,240.

Tax Calculation under GST System

Under the GST regime, manufacturers and dealers can benefit from input tax credit. 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 of GST on Product Pricing

Indirect tax will be levied by Central and State Government called Central GST (CGST) and State GST (SGST), respectively. In the case of intra-state transactions, the seller will collect CGST and SGST from the buyer which will be paid to the Central and State Government, respectively. Listed below is an example of the impact of GST on product pricing:

Old Tax System GST System
Price of a product sold from Pune to Jaipur = Rs.1,000 Price of a product sold from Pune to Jaipur = Rs.1,000
VAT @ 10% = Rs.100 CGST @ 5% = Rs.50 + SGST @ 5% = Rs.50
Cost of a product sold from Pune to Jaipur = Rs.1,100 Cost of a product sold from Pune to Jaipur = 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

GST Bill Rates and Its Calculation

The GST Bill is touted to be a landmark bill with respect to taxation in India. This Bill is being implemented with the intention of curbing ‘double-taxation’ and irregularities regarding the same. On 29 March, 2017 four bills were approved. The government has set a deadline of 1, July 2017 for the complete implementation of this Bill. A number of products and services would become cheaper and others would become heavier on the wallet. However, instead of the expected single tax slab, a multi-tier tax slab has been put forth with four different tax rates of 5%, 12%, 18% and 28%. The justification behind this multi-tier system is that essential goods and services cannot be taxed at the same rate as luxury products and services.

However, there are a number of confusions and doubts regarding the calculation of GST on products and the difference that would be made with the implementation of this landmark Bill. It is essential to note that the GST Bill has two components to it - one that is levied by the Centre which is known as CGST or Central GST and the other which is levied by all States known as SGST or State GST. Rates for each would be approved based on revenue and acceptability, among other factors. Except for those goods and services that have been exempted, SGST and CGST will be applicable on all goods and services. Both Centre and States would have jurisdiction for the determination of tax rates and for all taxpayers based on the threshold for products and services that have been prescribed.

From the example, it's clear that subsuming excise duty is favourable to the end consumer. There is a reduction in cost for manufacturers, wholesalers, and retailers due to the subsuming of VAT, Service Tax, and Excise duty. Due to the reduction in cost, there will be a reduction in input tax credit.

Tax Calculation for Inter-State Sales

Integrated GST (IGST) will be levied by the Central Government on inter-state supply of goods and services. In the case of inter-state transactions, IGST will be transferred to importing state. In the old tax system, CST was charged over and above VAT and the excise duty for movement of goods between 2 states. In the GST system, IGST is the only tax levied on goods moving across state borders. Below is an example to understand the IGST system:

Value to Manufacturer Old Tax System GST System
Cost of goods Rs.1,00,000 Rs.1,00,000
VAT of 12.5% Rs.12,500 -
IGST of 12% - Rs.12,000
CST of 2% Rs.2,250 -
Total value to retailer Rs.1,14,500 Rs.1,12,000

As per the above example, it is clear that under the GST system, manufacturers, wholesalers, and retailers will see reduction in cost whether it is inter-state or intra-state sales.

Benefits of GST Calculator

Here are some of the key benefits of using a GST calculator:

  • It enables users to determine the net or gross product price on GST rates.
  • It enables users to differentiate between SGST, CGST and IGST and calculate each tax accurately.
  • It saves time by providing instant results.
  • It lowers the risk of human error when calculating the cost of products and services.
  • It is simple to use and helps you calculate GST in a hassle-free manner.

General Benefits of implementing GST in India

Implementing a single indirect tax is beneficial in many ways such as:

  • It not only helps in setting an international standard but also ensures transparency throughout the tax structure right from the manufacturer to the consumer.
  • The primary objective of implementing GST is to prevent double taxation of commercial goods. GST is expected to ultimately increase competition among the manufacturers and sellers to provide high-quality goods which in turn will boost the GDP of the country.
  • The reduce in tax will bring down the production cost for companies. Thus, increase the competition among exporters.
  • Inflation is expected to decrease after the implementation of GST.
  • It is also said that there will be a decrease in tax liability. Reduction in price is expected as input tax credit is available against output tax. Following taxes will be set-off with the same or with the different tax input credits
CGST CGST and IGST
SGST SGST and IGST
IGST IGST , CGST and SGST

Changes

  • As observed in the previous examples, there have been changes noted in the type of tax and amount imposed.
  • Excise is generally applicable on capital goods during production used by manufacturer. Under the new Bill, excise on capital goods will be subsumed as there will only be a single rate of tax for each type of product.
  • Due to the subsuming of Service Tax, VAT, Excise, there will be a fall in the cost of wholesalers, manufacturers and retailers. This will in turn reduce the total cost to the manufacturer due to a reduction in procurement cost.
  • There will also be a fall in input tax credit for the retailer/wholesaler under GST.

Therefore, as observed there will be a fall in prices for the manufacturer. However, changes in GST rates will depend on the products and services.

GST Calculator FAQs

  1. Is registration required when it is exempted goods that have a brand of their own?
  2. No registration is required if there are no taxable supplies and there are only exempted goods being sold.

  3. Does sale of a pre-owned car to a dealer require GST to be paid?
  4. Under GST, sale of a car is seen as supply under GST and as such, registration is required. If the person is not engaged in any other form of supplies, then it is taken as casual taxable person which is valid only for 90 days.

  5. Are export services required to issue a tax invoice to the customer or a bill of supply?
  6. Exports are not exempted services and are taken as zero-rated supplies under the GST regime; hence, the tax invoice is required in the case of services being exported.

  7. Do ISDs require to a GST registration?
  8. ISDs have to take GST registration whether, in a state or a union territory, from where the taxable supply of goods or services or both is taking place.

  9. What happens if the status of a firm is changed from proprietorship to partnership?
  10. In such cases, new GST registration is required as the partnership will have a new PAN.

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