Goods and Services Tax (GST) is an indirect tax imposed in India which is levied on the supply of goods and services. GST is a comprehensive, multi-stage, destination-based tax levied on every value addition. It came into effect on 1st July 2017 and replaced most indirect taxes in the country.
Under GST, goods and services are divided into distinct tax rates such as 0%, 5%, 12%, 18%, and 28%. However, certain products like petroleum, alcohol, and electricity remain outside GST and are taxed separately by individual states.
IGST is charged for interstate supplies where the place of supply is in a different State compared to the location of the supplier. An equal rate of CGST and SGST (approximately half the GST rate applicable for IGST) is charged for intrastate supplies where the place of supply is in the same State compared to the location of the supplier.
A GST calculator is a ready-to-use online tool that helps compute the GST payable for a specific sale. It can be used by buyers, manufacturers, and wholesalers to calculate the tax amount either monthly or quarterly.
GST can be calculated using the following formulas depending on whether the price is inclusive or exclusive of GST:
GST Amount = (Value of supply × GST%) ÷ 100
Price to be charged = Value of supply + GST Amount
GST Amount = Value of supply – [Value of supply × {100 ÷ (100 + GST%)}]
Given below is a simple illustration for GST calculation:
| Particulars | Amount |
|---|---|
| Invoice value | 100,000 |
| GST @12% | 12,000 |
| Price to be charged on the Invoice | 112,000 |
| Particulars | Rate(%) | Amount Pre-GST | Amount under GST |
|---|---|---|---|
| Cost of the product | – | 200,000 | 200,000 |
| Profit | 10.00% | 20,000 | 20,000 |
| Excise Duty | 12.50% | 27,500 | Nil |
| Total | – | 247,500 | 220,000 |
| VAT | 12.50% | 30,938 | Nil |
| CGST | 6% | Nil | 13,200 |
| SGST | 6% | Nil | 13,200 |
| Final Invoice to the wholesaler | – | 278,438 | 246,400 |
There is a cost reduction for manufacturers, who pass this benefit along the supply chain to the wholesalers, retailers and end-consumers.
| Particulars | Rate(%) | Amount Pre-GST | Amount under GST |
|---|---|---|---|
| Cost of the product | – | 278,438 | 246,400 |
| Profit | 10% | 27,844 | 24,640 |
| Total | – | 306,282 | 271,040 |
| VAT to be paid (Rs. 306,282 × 12.5%) − (Credit on VAT paid above Rs. 30,938) | 12.50% | 7,347 | Nil |
| CGST to be paid (Rs. 271,040 × 6%) − (Credit on CGST paid above Rs.13,200) | 6% | Nil | 3,062 |
| SGST to be paid (Rs. 271,040 × 6%) − (Credit on SGST paid above Rs.13,200) | 6% | Nil | 3,062 |
| Final Invoice to the end-consumer | – | 313,629 | 277,164 |
The cost of the product falls due under the GST regime and the end-consumer has to pay a lesser price for the goods at the same profit margin earned by wholesalers and retailers.
The cost of the product falls due under the GST regime and the end-consumer has to pay a lesser price for the goods at the same profit margin earned by wholesalers and retailers.
For a detailed calculation of your net GST liability payable in cash, check out our GST input credit utilisation and tax calculation calculator. The tool works offline for you and automatically calculates the net liability in cash after considering the balances in the electronic credit ledger for each tax head — IGST, CGST, and SGST/UTGST.
