What is a GST Calculator and How Does It Work?

Jan 31st 2024

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Since the formal introduction of GST (Goods & Service Tax), companies have been keenly interested in the calculation of GST that they are supposed to pay against the business done by them. This is where using a GST calculator makes true sense. Put simply, the first and foremost use of a GST calculator is to determine the amount that a business is supposed to pay on a monthly or quarterly basis. In this post, we will delve deeper to know everything about GST and GST Calculator.

What is GST?

The GST Act was approved by the Indian parliament on March 29, 2017, and it was brought into force on July 1, 2017. The Goods and Services Tax refers to a type of indirect tax that is charged by the Government of India on all goods and services bought within its authority. It is a unified tax that has replaced several indirect taxes available in the earlier administration including VAT, Sales tax, Excise Duty, etc.

GST is known to be a major tax reform in the Indian taxation system as it was brought to simplify the tax structure by eliminating multiple taxes and combining all of them into one which is Goods and Service Tax (GST). GST is supposed to be executed at every level of the manufacturing of goods, thus, it is paid back to all the parties excluding the last customer.

Applying this tax at every point requires all the relevant parties to deposit the appropriate tax amount and submit GST returns to claim the refund amount. This makes the calculation of GST extremely necessary to get the complete amount back you are allowed to. To get support regarding this, a GST calculator can be used by taxpayers in India which would make GST calculations quick and easy.

How GST Calculator work?

GST calculator is an easy-to-use online tool that is used by people to calculate the appropriate GST amount that needs to be paid on the acquisition of goods and services. This calculator also helps people to know the exact amount of GST that must be included in the sale price of a product.

Let's consider an example of a GST calculation.

You have a product with a price of ₹1,000, and the GST rate is 18%.

Exclusive Calculation (Adding GST):

Original Price (Exclusive of GST): ₹1,000
GST Amount (18% of ₹1,000): ₹180 (₹1,000 * 0.18)
Total Price (Including GST): ₹1,180 (₹1,000 + ₹180)

Inclusive Calculation (Subtracting GST):

Total Price (Inclusive of GST): ₹1,180
GST Amount (18% of ₹1,180): ₹180 (₹1,180 / 1.18 * 0.18)
Original Price (Exclusive of GST): ₹1,000 (₹1,180 - ₹180)

To use a GST calculator, one is supposed to provide the following details:

Price to Calculate: You can choose whether you wish to calculate GST from GST exclusive price or GST inclusive price
Total Amount: The price (inclusive or exclusive) of the product
Tax Slab: The GST tax bracket the product belongs to Given the asked information, the GST calculator will reflect the following results:
Total GST Amount: Amount GST applicable on the initial product cost
Pre/post GST Amount: Price of the product inclusive/exclusive of GST

There is no need to enter any formula to calculate the applicable GST. The calculator is based on a proven calculation system that works on its own and is designed to give you the most precise results. You can use the given GST Calculator to calculate GST on your purchases.

What are the benefits of using a GST Calculator?

There are several benefits of using a GST Calculator including:

1. Accuracy Results: Among several benefits of using a GST calculator, one advantage is that it offers a high level of accuracy regarding the applicable GST amount that is applicable. The complex formula combined with this GST calculator takes into account several factors like IGST, CGST, SGST, and other concerned rates. This makes sure that the measured tax value is in line with the GST guidelines, thereby reducing the odds of errors in tax calculation.
2. By Applicable GST Regulations: The GST Calculator is considered highly reliable by corporate firms when it comes to ensuring compliance with the ever-changing GST guidelines in India. Enabling a systematic method of GST calculation, helps businesses stay close to the agreed guidelines, averting possible penalties related to non-compliance.
3. Clear Bifurcation of Tax Elements: A GST calculator enables a translucent divergence of various tax elements such as IGST, CGST, and SGST. This level of transparency is indispensable for businesspeople to decode the distribution of tax amounts among different entities, allowing them to make sagacious business decisions concerning product pricing and general finance.
4. Rationalized Calculation Procedure: The GST Calculator shortens the complexity of GST calculation. The formula used is based on various relevant factors such as GST-inclusive price, taxable amount, and tax measurement. This rationalized process tends to improve tax efficiency, enabling decision-makers to concentrate on their main chores rather than contending with complex tax calculations.
5. Rapid Measurement of Tax Influence: Businesses can use the GST Calculator to rapidly determine the tax effect on their products or services. By entering the initial product/service price, and GST rate percentage, and choosing the preferred calculation option (include GST or eliminate GST), the calculator gives quick results, allowing businesses to make well-versed pricing choices.
6. Easy Usage: The easy user interface of the GST Calculator makes it simpler for people with different levels of tax know-how to use it. Be it a business owner, individual customer, or accountant, r, the calculator ensures that its users can easily use the tool without any hassle.

How to use a GST Calculator Online?

The process of employing a GST Calculator is made up of several easy steps. Whether you use it for one product or multiple products, the calculator can help you with easy GST calculation online. Below is a step-by-step guide:

Step 1: Pick Calculation Option

Depending on whether you wish to include or omit GST from the original price, choose the relevant calculation option. GST-contained and GST-exclusive options are common choices that provide you the freedom to customize the computation to meet your unique company requirements.

Step 2: Enter Product Information

Provide information about the item you bought, such as its quantity and the appropriate GST rate. Precise computations that accurately represent the tax consequences of the chosen product are ensured by accurate input.

Step 3: Click ‘Calculate’

Once the required data has been entered, click the "Calculate" button to start the calculating process quickly. Even with intricate computations, customers are guaranteed a smooth experience because of the user-friendly UI.

Step 4: Check Outcomes

The whole amount, including the computed GST, will be shown by the GST Calculator. Examine the findings to comprehend how taxes affect the product, enabling well-informed choices about pricing and money handling.

FAQs

Q. What products contain 5% GST?

- Products that levy a GST of 5% can be pre-packaged and labeled goods, UHT milk, certain milk and cream products, yogurt, curd, whey, cotton cheese, eggs, honey, eatable insects, sugar, tea, coffee, edible oil, and cereals.

Q. How many GST slabs are available at present?

- As of now, there are four GST slabs – 5%, 12%, 18%, and 28%.

Q. What is GSTIN?

- GSTIN refers to a unique GST registration number allotted to businesses when they register themselves on the GST portal. This is used in place of TIN.

Q. What do CGST and SGST mean?

- CGST and SGST simply refer to Central GST and State GST correspondingly. The CGST and SGST are used in the computing of the overall GST amount. If an item has 18% applicable GST on its overall price, 9% would contribute to CGST and the other 9% towards SGST.

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