
GST (Goods and Services Tax) is a significant tax reform that paved the way for a unified taxation system, eradicating the tax-on-tax system. With the integration of GST, it has become easier for taxpayers to know how much tax they are charged on every step of production and supply of goods and services.
Manufacturers, sellers, and consumers can use the GST calculator to estimate the total cost of goods and services. However, before calculating GST in India, taxpayers must have a well-rounded idea of the different tax rates and heads. Under the new tax regime, GST rates are 5%, 12%, 18%, 28%.
Know how to calculate GST using a GST calculator in India
With the GST calculator, individuals can compute the applicable GST amount while purchasing goods or services and know the amount embedded in the product price. Here are the steps that will help buyers, wholesalers, or manufacturers know how GST is calculated:
Step 1: Enter cost of the product or services.
Step 3: Now add a suitable GST rate per the category under which the chosen product/ service falls.
Step 4: Then select the ‘calculate’ tab.
On clicking the tax amount for CGST, SGST or IGST and the net price of the concerned product or services will be displayed.
GST calculation formula
GST calculator works based on the formulas mentioned below. Here are the two formulas that help estimate the net cost of the product both on adding and removing GST.
- When GST is added
GST amount = (Original cost X GST%)/ 1000
Final price= Original Cost + GST amount
- For GST exclusion
GST amount= Original cost – [Original cost X {100/( 100 + GST%)}]
Net price= Original cost – GST amount
To calculate net GST payable, one can use this formula-
Know different heads under GST
To make an informed computation, individuals must know the four different heads under GST:
- SGST (State Goods and Services Tax), which is collected by the State government.
- CGST (Central Goods and Services Tax), collected by the Central Government
- UTGST (Union Territory Goods and Services Tax), Union Territory Government collects this
- IGST ( Integrated Goods and Services Tax), collected by the Central Government while inter-state transactions and imports.
As GST has a major impact on working capital for businesses, GST computation has become elementary for business professionals, helping them understand when to avail of external credit options like a business loan.
With the implementation of GST, the number of warehouses that companies have to maintain has reduced, leading to significant savings on working capital. On the other hand, tax payment timelines prompt businesses to avail of a working capital loan or business loan. Hence, businesses, companies or firms compute GST liability before availing of a business loan. It will help them decide on the loan amount.
Besides knowing how to use a GST calculator, business professionals must also know how to register for GST online. Being GST compliant helps businesses enhance their credibility and reap multiple advantages. On the other hand, non-compliant businesses are penalised on the ground of being illegitimate.
However, before registering the business, individuals must know all about the GST bill, helping them make an informed decision.
Being GST registered will help businesses reap pre-approved offers extended by financial institutions like Bajaj Finserv on various financial products like business loans, personal loans, credit cards etc. These offers streamline the application process. Intending individuals can check their pre-approved offers by submitting their names and contact details.
To sum up, the GST calculator is an effective online tool that helps estimate payable GST and the gross product price based on GST rates. It curbs the chance of errors while estimating the total expenditure of goods and services.
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