Goods and Services Tax or GST refers to the indirect tax levied on the supply of goods and services. From July 1, 2017, GST came up as single taxation system in India and replaced all the indirect taxes in the country. The Central Government passed the GST Act in the Budget Session in 2017 that was approved by the Parliament on March 29, 2017. Some of the indirect taxes that were abolished were Central Excise Duty, VAT, Entry Tax and Octroi.
GST is a comprehensive tax levied on the manufacture, sale and consumption of goods and services in the country. Different small and large organizations are required to have a GST Identification Number to get registered under GST policy. When any kind of sales transaction is made within states (Inter-state), Integrated GST is charged. And for any intra-state sales, Central GST and State GST are levied.
Different forms of GST collected by the government are:
State GST (SGST): It is collected by State Government
Central GST (CGST): It is collected by Central Government
Integrated GST (IGST): It is collected by Central Government for inter-state transactions and imports
Union Territory GST (UTGST): It is collected by Union Territory Government
How is GST calculated?
With the unified system of taxation, it is now possible for taxpayers to know the tax levied at different points for various goods and services under the GST regimen. For the calculation of GST, the taxpayer should know the GST rate applicable to various categories. The different slabs for GST are 5%, 12%, 18% and 28%.
GST calculation can be explained by simple illustration :
If a goods or services is sold at Rs. 1,000 and the GST rate applicable is 18%, then the net price calculated will be = 1,000+ (1,000X(18/100)) = 1,000+180 = Rs. 1,180.
GST Calculation Formula
For calculating GST, a taxpayer can use the below mentioned formula :
In order to add GST to base amount,
GST Amount = ( Original Cost * GST% ) / 100
Net Price = Original Cost + GST Amount
In order to remove GST from base amount,
GST Amount = Original Cost – (Original Cost * (100 / (100 + GST% ) ) )
Net Price = Original Cost – GST Amount
What is GST Inclusive amount?
GST inclusive amount refers to the total value of the product after including the GST amount in the original value of the product. The tax is not charged separately from the customer.
What is GST Exclusive amount?
GST Exclusive amount refers to the value of the product by subtracting the GST amount from the GST Inclusive value of the product.