What Is A GST Calculator? Let's Read to Catch the Answer Right Now
Most Indian companies will sign up for GST. Thus, it's crucial to comprehend how it works and your duties as a business owner. When it comes to taxes, you need an accurate result. That's when a GST calculator comes into play. But you should also know how the rule works.
This guide will give you a complete guide to GST, including its definition and formulas. You can also find out how to calculate the rate. So let's join us to discover!
Table of Contents
- What Is A GST Calculator?
- How to Calculate GST Percentage?
- How Does GST Work?
- Examples For Understanding GST Calculation
- Benefits Of Using Online GST Calculator Tools
- Frequently Asked Questions
What Is A GST Calculator?
GST stands for Goods and Services Tax, an indirect tax charged on the supply of goods and services. It's a comprehensive tax that works on every stage and value of the products.
The government launched GST on 1st July 2017 and used it to replace most indirect taxes. There are five rates under GST: 0%, 5%, 12%, 18%, and 28%.
However, this tax doesn't apply to all products. Some exceptions include alcoholic drinks, petroleum, and electricity. Instead, the state governments tax them separately.
The GST calculator is a practical, ready-to-use web-based tool for calculating the GST. Buyers, producers, and wholesalers can take full advantage of this tool.
The streamlined GST calculator offers you a breakdown of percentage-based GST rates. It also assists you in calculating the cost of a net or gross product based on the quantity.
Besides, when working with GST, you will encounter some terms and calculations, such as:
CGST (Central Goods and Services Tax): This rate applies to any business within a state's boundaries or on a local scale.
SGST (State Goods and Services Tax ): Similar to CGST, this tax works on transactions inside states or an intrastate base.
IGST (Integrated Goods and Services Tax): Transactions between states or at the interstate scale are subject to this tax.
How to Calculate GST Percentage?
Thanks to the unified system, taxpayers know the tax imposed at multiple phases for various products and services under the GST regime. To calculate GST exclusive and GST inclusive, they must know the given GST rates we have mentioned.
For GST Addition
To calculate the GST exclusive, we have these formulas:
GST Amount = (Original Cost X GST Rate)/100
Net Price = Original Cost + GST Amount
For example, if the cost of your product is 100, and the GST rate is 18%, then your GST exclusive value will be:
GST Amount = Original Cost x GST Rate = (100 x 18)/100 = 18
Net Price = Original Cost + GST Amount = 100 + 18 = 118.
For GST Removal
To calculate the GST-inclusive value, we use these two formulas:
GST Amount = Original Cost - (Original Cost X 100100 + GST Rate)
Net Price = Original Cost - GST Amount
Let's say you purchased a product with a selling price of 105 (GST exclusive) that falls inside the 5% GST category.
Original cost = 105 - (105 X 100100 + 5)= 100
How Does GST Work?
To understand GST, you should start with your duties under regulations, which include the following:
Registering for GST
If your taxable turnover as a business reaches $1 million, you must apply for GST. Under the Reverse Charge and Overseas Vendor Registration systems, you will be liable for registration.
Once registered for GST, you must add GST to all taxable goods and services at the current GST rate.
The output tax you levy and receive is GST. Within a month of the end of an accounting period, output tax will be due to IRAS.
If you have a GST registration, you can exclude the GST paid on your business's costs and expenditures as input tax on the GST return. It is dependent on you satisfying the needs for claiming the input tax.
If you meet specific criteria, you can also be eligible to claim GST that you paid before GST registration. At each step of a distribution chain, this input tax credit method assures that you only pay for the value-add.
The difference between input and output taxes is that you can pay the net GST or refund it to IRAS. In your GST return, you must include both in your report.
You have one month from the end of every specified accounting period to send your GST return. It often occurs every three months.
Examples For Understanding GST Calculation
Before a product gets to its final customer, it must go through multiple phases, and various taxes may be due on their way. This example will help you picture the whole process.
Phase 1: Manufacturing
Consider clothing manufacturing as an example, with a 10% GST. The firm purchases raw resources for INR 500, and its GST inclusive is 10% of INR 500. So we have a GST inclusive of INR 50.
During the production process, the manufacturer adds his value of INR 50 to the materials, raising his product's gross value to INR 550.
The total tax on the manufacturing of the garment is now INR 55. The manufacturer will be responsible for paying it under the present tax regime.
He can, though, subtract part of his tax under GST because he had paid it when he purchased the materials. As a result, the final GST for the manufacturer will only be INR 5.
Phase 2: Wholesale
The manufacturer sends the garment to the wholesaler. The gross value of the product is INR 550, with its GST inclusive being INR 55.
After adding his worth of INR 50, the wholesaler brings the total value to INR 600. It raises the total tax to INR 60, 10% of the total value.
The wholesaler can also set off the tax amount with the value he has previously added for buying the items from the manufacturer. Hence, the wholesaler's GST will be INR 5.
Phase 3: Retailer
The retailer purchases the clothes from the wholesaler for a gross value of INR 600, which includes INR 60 for GST.
The total cost of the items is INR 650 when he puts his value of INR 50. GST exclusive, in this case, is 65.
The retailer may set off the tax because he previously paid it when he bought it. As a result, the retailer's highest GST incidence will be INR 5.
Ultimately, because the retailer may sell the item for INR 650, the final consumer will only have to pay INR 65 (10% of 650).
Benefits Of Using Online GST Calculator Tools
Even when you have the right GST calculation formula, handling it will still be tricky. Hence, you need a GST calculator to ease your concern. We recommend online tools as they offer tons of benefits.
You can calculate GST exclusive and inclusive value without paying any cost. All you need to do is to access the site and have fun with the numbers.
Ease of use
GST calculation will be much easier thanks to the advanced calculating system. The online calculator will ask you to input the gross Price of your product and determine if you want a GST-exclusive or GST-inclusive value. Within a few seconds, you can see the result.
Our GST calculation is safe because the system doesn't track or save your activities. It doesn't even require you to sign in. Hence, you will act as an anonymous on the site.
You can see your GST-exclusive and GST-inclusive values in a few seconds. If you have to wait for longer, please check your internet connection.
Calculating GST becomes cumbersome if you have to download and install the software. Luckily, online tools require no installation. Just save the website link, and come back whenever you need to calculate your total GST value.
Frequently Asked Questions
1. Do all products come under GST?
Only processed, semi-processed, and packaged products are subject to the GST, which varies from 5% to 18%. Fresh food is exempt from GST.
2. Who has to pay GST?
In general, suppliers of services and goods must pay GST. However, the recipients must be in charge of it in certain situations, such as imports and other registered goods.
3. Who can get the GST number?
Every company that sells goods with an annual revenue of more than INR 40 lakh is obliged to register as a regular taxpayer. If you own a company in the northeastern states of Himachal Pradesh, J&K, or Uttarakhand, the threshold limit will be INR 10 lakh.
4. Is GST compulsory for small businesses?
Yes, all small firms register for GST. If you manufacture products with an annual turnover of more than Rs. 40 Lakhs, you should consider obtaining a GST, no matter how big your business is.
5. Who is GST exempt?
If the total annual revenue of the businesses and people supplying the items is lower than INR 40 lakhs, they are qualified for GST exemption.
6. How much GST do I charge?
There are five GST rates: 0%, 5%, 12%, 18%, and 28%. Check for your state's regulations to determine which rate you will charge.
GST involves working with the net Price, gross Price, inclusive, exclusive, and many other tasks. But thanks to the GST calculator, you will relieve your stress with the numbers.
Hopefully, you will find this guide helpful. For any further information, please feel free to ask. Thank you for reading!