How to Calculate GST Amount on Goods & Services?

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GST or Goods and Services Tax came as a replacement of indirect taxes from 1st July 2017, bringing the entire indirect tax structure under one umbrella. GST Amount It is applicable to the manufacturing, sales and consumption of goods and services in the country. 

According to the GST Act, every business enterprise, in order to be tax compliant, has to mandatorily register for the GST. Before filing the tax returns, one needs to have proper knowledge about how to calculate GST in order to know the exact amount payable. Accordingly, one can use a GST calculator to evaluate the same.

Advantages of a GST calculator

  • It will ensure an accurate result, reduce time and human errors.
  • It can help to remain tax compliant and avoid late payment of dues.
  • Helps to maintain the monthly budget after setting aside the tax amount in advance.

How is GST calculated?

To calculate GST, you need to enter the applicable rates imposed on the category of goods or services with the valued price of the applicable goods or services. 

For example, if a good or a service is priced at Rs.20,000 and the GST rate is 18%, then the net price of that good or service will be – Rs. [20,000 + (20,000X18%)] = Rs. (20,000 + 3600) = Rs.23,600.

Likewise, while using a GST calculator online, you will need to enter the respective details:

  • Net price of goods and services.
  • Applicable GST rates like 5%, 12%,18%,28%.

After entering the data, click on the compute button. You will get the gross price along with the tax amount applicable under different heads of IGST, CGST and SGST.

Points to know to calculate GST

Before getting on to calculating GST like a pro, an individual will need to have detailed knowledge of the below pointers –

  1. Know the HSN and SAC code

HSN codes are an international system of identifying the goods, while SAC classifies the type of service under GST. After recognising the code of your good or services, there are applicable rates of GST that are categorised into different slab rates such as 5%, 12%, 18%, 28% and are applicable according to the product category.

  1. The applicability of IGST or CGST and SGST

GST is categorised into four different heads as collected by the Government.

  • Central GST– Collected by Central Government.
  • State GST– Collected by State Government.

Both Central and State GST are levied on the goods and services within a single state.

  • Integrated GST– Collected by the Central Government for imports and inter-state supply of goods or services.
  1. Reverse charge services

In order to remain tax compliant, most of the time, the onus is upon the supplier of goods and services. If your service falls under the list of reverse charge services, like, services provided by a travel agency, then it shifts the burden of GST payment on to the recipient of the services.

  1. Type of transaction

Under GST, two types of transactions are listed below:

  • Business to Business– For a supply to comply with a business-to-business transaction, one has to be eligible for GST input credit tax. But this can be only possible if the supplier and the recipient of goods or services have GSTIN, the number that is provided after registration.
  • For Business to Consumer– The value of supply needs to be more than Rs.2.5 lakh.
  1. Enrolling under GST Composition Scheme

Small and medium-sized enterprises, whose turnover is less than Rs.1.5 crore, often find GST formalities difficult and hence, require a simple process. Accordingly, they can enrol for GST Composition Scheme and pay the taxes at a fixed rate of turnover. A supplier who is employed under the Composition Scheme, cannot claim the input tax credit and cannot supply goods out of state. Further, reverse charge service rates are applicable at the normal rates. 

After taking these factors into consideration, use a GST calculator to gauge your tax liability. Making timely GST payment is extremely important, as it is one of the factors that financial institutions take into account while approving a business loan.

Calculating GST beforehand is imperative to ensure a hassle-free filing of GSTR 1 and other requisite forms. After GST registration and GST login, and subsequent calculation of GST liability, head on to complete the filing process.

Nonetheless, leading financial institutions like Bajaj Finserv bring pre-approved offers that facilitate an easy application with minimal documentation requirements. These offers are available on various financial products, including business loans, personal loans, etc. You can check your pre-approved offer by providing your name and contact details. 

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