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Goods and Service Tax Calculator Online

GST is Goods and Services Tax in India. It is a type of indirect tax that has helped replace various indirect taxes in the country. Few of these taxes included Value-Added Tax (VAT), excise duty, and services tax, to name a few. On 29 March 2017, the GST Act was passed by the parliament. This tax came into action on 1 July 2017.

To put it in the easiest of terms, and as the name suggests, the Goods and Service Tax (GST) is applied to the trade of goods and services. The GST is a comprehensive, multi-stage, destination-based tax that is applied to all value additions.

The Goods and Services Tax is a single domestic indirect tax law throughout the country. With GST, a tax is applied on all points of sales. When it comes to intra-state sales, State GST and Central GST are applied. Every inter-state sale is chargeable to the Integrated GST.

The Voyage of GST (Goods and Service Tax) in India

The journey of GST started in 2000. A committee was built to draft a new law. It took seventeen years for the law to develop. In 2017, the Goods and Services Tax bill was passed in the Lok Sabha and Rajya Sabha. The GST was launched on 1 July 2017..

What are the elements of GST (Goods and Services Tax)?

Three taxes are there under GST. These taxes are CGST or Central Goods & Services Tax, SGST, also known as State Goods & Services Tax & IGST or Integrated Goods & Services Tax.

  • The tax levied by the Central Government on an intra-country sale is called CGST.
  • The tax levied by the State Government on an intra-state sale is called SGST.
  • The tax levied by the Central Government for an inter-state sale is called IGST. For example, if the sale is happening between two states, Maharashtra and Gujarat.

What are the objectives of GST?

Goods and Services tax has replaced many indirect taxes prevalent during the earlier tax regimes. With GST, India has finally realised its dream of 'One Nation, One Tax.

The biggest advantage of having only one tax is that all the states in India must abide by the same rate for a given product or service. The overall tax administration becomes easier as the Central Government decides the policies and rates.

This has made introducing common laws easier, like e-way bills for transporting goods and e-invoicing for reporting transactions. The tax compliance is now sorted as individuals who are paying taxes are not stressed with several return forms and deadlines. It is now just a unified system of indirect tax compliance.

1) To eliminate several indirect taxes in India

To eradicate several taxes like VAT, service tax, central excise, etc., GST was introduced as a comprehensive tax. The above-mentioned taxes were governed by both state and central governments. They lacked a unified, centralised tax on goods and services. To overcome this limitation, GST was introduced in India.

2) To impede tax evasion

Goods and Services Tax laws are more strict than ever before. Under GST, tax-paying citizens can claim an input tax credit only on invoices uploaded by their suppliers. This eliminates the chances of claiming tax credits on fake invoices.

The launch of e-invoicing has strengthened this objective. As it is a nationwide tax with a centralised surveillance system in place, the defaulters and tax frauds have been reduced over time.

3) To increase the taxpayer base?

GST has increased the tax base in the country. Earlier, every tax law had a separate threshold limit for registration depending on turnover.

As GST is a consolidated tax applicable on both goods and services, it has increased businesses and organisations that are tax-registered. Furthermore, as the GST laws are strict, they have brought unorganised sectors under the net of tax. For example, the construction sector in India.

What are the advantages of GST?

The Goods and Services Tax has eliminated the cascading effect on the goods and services sales and has indirectly affected the prices of goods. Since there's no tax on tax anymore with GST, the prices of goods have decreased compared to earlier days. Moreover, GST is tech-driven. The time taken to hear back from the authorities has also reduced as everything is done online through the GST portal.
br>Take a look at several significant advantages and benefits of GST:

  • There is uniformity in taxation.
  • It helps Government revenue find buoyancy.
  • The easier and fewer number of compliances.
  • Simpler procedures for filling.
  • Benefits to the economy.
  • Overall advantageous to industries and trade.

How is GST calculated?

1) Calculating GST is easy and uncomplicated. All you must do is simply multiply the taxable price along with the GST rate. Remember that the CGST and SGST will be half of the total GST amount if they are applicable.

2) Here is the mathematical formula to calculate GST:

GST = Taxable Amount into GST Rate

3) Suppose you have an amount that is already included in the GST, then you can compute the rate of GST omitting the amount with the help of this formula:

GST excluding price = GST including price / (1 + GST rate / 100)

Nowadays, a lot of banks and financial institutions have GST calculators online on their websites, where you can go and input all the required data like GST rate and price of your item, and it will calculate the GST amount for you. This has made calculating GST even easier.

Example of GST Rates

Goods and Services Tax (GST) in India is categorised into different slabs based on the type of goods and services. The primary GST rates are:
GST Rate Category
0% GST Exempted Goods & Services
5% GST Essential Goods
12% GST Processed & Specific Consumer Goods
18% GST Standard Rate for Most Services & Goods
28% GST Luxury & High-End Goods

The GST rate in India varies based on the category of goods and services. It is broadly classified into four slabs—5%, 12%, 18%, and 28%. Some essential goods and services are exempt from GST, while others attract a cess in addition to the highest 28% rate. The applicable GST rate depends on the classification of the product or service under the GST framework.

How to Calculate GST Under Reverse Charge?

Under the Reverse Charge Mechanism (RCM) in GST, the responsibility of paying tax shifts from the seller (supplier) to the buyer (recipient). This is applicable in specific cases, such as imports, services from unregistered suppliers, and notified goods/services under GST law.

Steps to Calculate GST Under Reverse Charge

  • Identify if Reverse Charge is Applicable
    • Check if the goods or services fall under the RCM category as per GST law.
    • Examples include legal services, import of services, and goods like cashew nuts, tobacco leaves, etc.
  • Determine the GST Rate
    • Find the applicable GST rate (5%, 12%, 18%, or 28%) for the goods/services.
  • Calculate GST Liability
    • Use the formula:
    GST Payable = (Taxable Value × GST Rate) / 100
    • Example: If a business purchases services worth ₹10,000 at an 18% GST rate, the GST payable will be:
    ₹10,000 × 18% = ₹1,800
  • Self-Payment & Input Tax Credit (ITC) Eligibility
    • The recipient must pay the GST amount directly to the government instead of the supplier.
    • If eligible, the paid GST can be claimed as Input Tax Credit (ITC) in future tax filings.
  • GST Return Filing
    • Report the reverse charge transactions in GSTR-1, GSTR-3B, and other applicable returns.

By following these steps, businesses can ensure compliance with GST rules under the reverse charge mechanism while managing tax liabilities efficiently.

FAQs (Frequently Asked Questions)

Who collects IGST?

IGST is collected by both Central Government and State Government depending on the prefixed revenues.

Can I pay GST bills online?

Yes, GST is technologically driven. You can pay your GST bills online easily in a few steps through the official GST website.

How to find the GST rate?

You can find the GST rate for specific goods and services on the official GST portal (www.gst.gov.in) or refer to the latest GST rate notifications issued by the government.

How to file a GST return?

To file your GST return:
• Log in to the GST portal (www.gst.gov.in).
• Navigate to the 'Returns Dashboard’.
• Select the appropriate return form (e.g., GSTR-1, GSTR-3B).
• File it as per your tax period.

DisclaimerThe information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.