Goods and Services Tax, also known as GST came into effect on 1st July 2017. It was an initiative by the Government of India to ease the process of tax calculation by integrating other applicable taxes such as VAT, excise duty, etc. into one.
Your firm should be registered under GST and GST identification number to carry on with business transactions. As such, you must know its calculation process.
The calculation process of this tax is relatively easy, and you can make use of online GST calculator available online. You can also choose to calculate your payable tax manually if you have a solid grip on the process.
GST is segregated into five slabs, which are 0%, 5%, 12%, 18%, 28%, depending on the category of products and services. Specific products like petroleum, petroleum-based products, alcoholic drinks, etc. do not fall under GST and are taxed differently.
Given below are some methods that you can follow to calculate GST like a pro.
Understand the process of GST calculation with the help of the examples given below.
If the cost of a product is exclusive of tax, follow the below-mentioned steps on how to calculate GST to estimate the total selling price of your product after tax.
- The selling price of your service or product is Rs. 20,000.
- The product falls under the 12% GST slab.
[(12/100) X20, 000] + 20,000, which equals up to Rs. 22,400 (2400 + 20,000)
Thus, the total amount your buyer pays against your product is Rs. 22,400; where 2400 is the tax amount and 20,000 is the product cost.
If your product is inclusive of tax, follow the below-mentioned steps to calculate your GST amount and retail price.
- The selling price of your product is Rs. 20,000.
- The product falls under the slab of 12%.
Calculation: 20,000- [(12/100) X 20,000], which equals up to Rs. 17,600 (20,000 – 2400)
Here, the total amount your buyer pays against your product is Rs. 20,000, where the actual retail price is Rs. 17,600 and the payable GST amount is Rs. 2400.
Using GST calculator:
You can make use of a GST calculator to estimate your GST amount and actual price by following the below-mentioned process. The GST calculator for buyers and sellers are the same.
- Select whether your product is exclusive or inclusive of GST.
- Enter the original amount (in the case of exclusive of tax) or the selling amount (for products inclusive of tax).
- Choose the rate of GST of your product.
- Select the ‘calculate’ option to check your results.
As mentioned above, to continue your business, you will have to register your firm with the GST regime first. The registration process is convenient, and you can do so online. To register for GST online, access the official Goods and Services Tax portal and enter your PAN, contact number and email address and fill the registration forms (GST REG- 01 and GST REG- 03). You will receive an OTP on the provided contact numbers. After you enter the OTP and your details are verified, your GST registration certificate and GST identification number will generate within three working days.
In addition to the above, a buyer can also make use of the GST calculator to estimate the amount paid as GST. The process for a buyer is also the same as that of a seller. Just enter the purchase price of your product, GST rate and select whether your product is inclusive or exclusive of tax.
Views on GST Pay Good or Not:
Yes, I think paying taxes is really good and also paying tax is now a mandate in India.
Here are some good reasons that describe why it is mandate to pay tax being a citizen of India:
- The tax is required by the government to utilise for the benefit of the people
- The tax money is used to provide different beneficial schemes, rebates and support to different industries, people and for the development of the overall country
- Paying tax is always best as you contribute to the overall progress of the country and provide economic support to the government of India
- Think of farmers who are unable to pay their debts, farm loans and other expenses, government use this tax money to provide financial support or even waive the loans when required most.
- This tax money is used to pay the salaries of army men
- It is used to develop infrastructure for companies, construct roads, bridges and other handle other projects that lead to the overall progress of the nation
- This tax money is necessary to develop transportation, provide free medical facilities to poor people and manage other expenses of the country
Hence, paying tax is necessary and for this, the taxpayer has to fill the income tax form 16 and submit to the tax department. However, in certain conditions you don’t need the form 16, so before filing the tax, it is important to know when form 16 is mandate or not for you to file taxes. Thus, it is the responsibility of every individual in a country to pay direct or indirect tax and provide financial support to the government that will be returned in the form of facilities and support schemes