GST Calculator is an effective tool that can be used to determine the amount of tax applicable on different products and services. The tool essentially helps you find out how much a product or service would cost after the application of GST.
GST, which is short for Goods and Services Tax, is an indirect tax system that came into effect on July 1, 2017. It is a comprehensive, destination-based, multi-stage tax levied at every value addition. The new tax regime has replaced a number of indirect taxes that were previously in place. GST is a single indirect tax for the whole nation, conceived on the principle of 'one nation, one tax, one market'.
GST is paid at the time of procurement of goods and services and set off against that payable on the supply of goods or services. The wholesaler or manufacturer or retailer will incur the applicable GST rate, but can later claim it back via the tax credit mechanism. This ultimately means that every seller recovers the tax from buyers, thus placing the burden of taxes on those who are the end users of goods and services.
To find out the how GST affects the price of a product or service, all that one needs to do is input into the tool the original cost of the product or service and the GST rate applicable - 5%, 12%, 18% or 28%. Based on this data, the calculator will show how much one would need to pay as GST for a product or service.
The formula for GST calculation is as under:
GST Amount = (GST x Original cost of the product or service) / 100
Net Price = Original cost of the product or service + GST amount
To remove GST:
GST Amount = Original cost of the product or service - [Original cost of the product or service x {100 / (100 + GST%)}]
Net Price = Original cost of the product or service - GST amount
GST rates range from 0% to 28%. The government has put into place five different tax slab under which all products and services are listed. They are 0%, 5%, 12%, 18% and 28%. Many essential goods are not taxed at all, while the luxury items are taxed at the higher rate i.e. 28%.
At the time of introducing GST, Finance Minister Arun Jaitley had said that the government intended to keep the new tax rates close to the original rates. However, there would be a difference in some cases as a result of the changes in the economy. Some commodities were placed in the high tax bracket i.e. 18% and 28%, however after scrutinizing the list, the government decided to mark certain commodities as necessities and not luxuries. Hence, the GST rates have been revised for some of the commodities.
Here is a look at some of the recent changes in the rates of goods and services
| Items | New Rate | Old Rate |
|---|---|---|
| Sanitary Napkins | Nil | 18% |
| Coir pith Compost | Nil | 5% |
| Raw material for broom | Nil | 12% |
| Stone/Marble/Wood Deities | Nil | 5% |
| Raw material for broom | Nil | 12% |
| Handmade Carpets, Textile Floor, Coverings | 5% | 12% |
| Marine Engine | 5% | 28% |
| Zip and Slide Fastener | 12% | 18% |
| Washing Machines | 18% | 28% |
| Vacuum Cleaners | 18% | 28% |
| Hair Cleaners | 18% | 28% |
| Hair Dryers, Hand Dryers | 18% | 28% |
| Special purpose motor vehicles | 18% | 28% |
| Toilet Sprays | 18% | 28% |
| Scent Sprays | 18% | 28% |
| Supply of e-books | 5% | 18% |
To understand how GST impacts product pricing, consider the following example:
| Earlier Tax System | GST |
|---|---|
| Product is sold from Mumbai to Pune | Product is sold from Mumbai to Pune Price = Rs. 2,000 |
| Price = Rs. 2,000 | |
| VAT at 10% = Rs. 200 | CGST at 5% = Rs.100 + SGST at 5% = Rs. 100 |
| Product is sold from Pune to Chennai Cost = Rs. 2,200 Profit = Rs. 800 Sale Price = 3,000 | Product is sold from Pune to Chennai Cost = Rs. 2,200 Profit = Rs. 800 Sale Price = Rs. 3,000 |
| Central Sales Tax at 10% = Rs. 300 | IGST at 10% = Rs. 100 i.e. 300 - CGST (100) - SGST (100) |
| Cost of Product = Rs. 3,300 | Cost of Product = Rs. 3,100 |
The GST Bill is being regarded as a landmark tax reform in India. It was implemented with the intent to put a stop to ‘double-taxation’ and discrepancies concerning the same. The justification behind enacting different tax slabs was that essential goods and services could not be taxed at the same rate as luxury products and services. An essential point to be noted is that there are two components to the GST Bill - one levied by the Centre, known as CGST or Central GST, and the other levied by all State, known as SGST or State GST. CGST and SGST are required to be collected by the seller from the buyer in case of intra-state transactions, whereas IGST is required to be collected by the seller from the buyer for inter-state transactions.
Here is a quick look at the various GST tax slabs in India:
| GST rate | What's included? |
|---|---|
| 0% | Zero rate of GST is applicable to essential items and products that are consumed on a regular basis such as milk, salt, newspapers, bread, fresh fruits & vegetables, etc. |
| 5% | 5% GST is applicable to common use items. This includes packaged food items, postage or revenue stamps, ayurvedic medicines, tea, etc. |
| 12% | Items falling under the 12%-GST slab include spoons, forks, umbrella, sewing machine, butter, cheese, ghee, etc. |
| 18% | Most of the items have been listed under this tax slab. This includes refrigerators, cocoa powder, granite, etc. |
| 28% | Items that falls in the 28%-GST slab, which is the highest slab, are cement, automobile parts, motor vehicles, cigarettes, etc. |
How do I calculate GST?
Follow the below formula to calculate GST:
GST Amount = (GST x Original cost of the product or service) / 100
Net Price = Original cost of the product or service + GST Amount
To remove GST:
GST Amount = Original cost of the product or service - [Original cost of the product or service x {100 / (100 + GST%)}]
Net Price = Original cost of the product or service - GST Amount
What is the rate of GST?
GST rates range from 0% to 28%. The government has categorized products and services into five different tax slabs - 0%, 5%, 12%, 18% and 28%. Here is a look at what falls under the each of the GST tax slabs:
| GST Rate | What's included? |
|---|---|
| 0% | Zero rate of GST is applicable to essential items and products that are consumed on a regular basis such as milk, salt, newspapers, bread, fresh fruits & vegetables, etc. |
| 5% | 5% GST is applicable to common use items. This includes packaged food items, postage or revenue stamps, ayurvedic medicines, tea, etc. |
| 12% | Items falling under the 12%-GST slab include spoons, forks, umbrella, sewing machine, butter, cheese, ghee, etc. |
| 18% | Most of the items have been listed under this tax slab. This includes refrigerators, cocoa powder, granite, etc. |
| 28% | Items that falls in the 28%-GST slab, which is the highest slab, are cement, automobile parts, motor vehicles, cigarettes, etc. |
Which country started GST first?
The first country to implement GST was France in 1954.
Is GST calculated after discount?
Section 15 of the CGST Act, 2017, relates to the provisions of discounts under GST. It reads “(3) The value of the supply shall not include any discount which is given ––
before or at the time of the supply if such discount has been duly recorded in the invoice issued in respect of such supply; and
after the supply has been effected, if—
such discount is established in terms of an agreement entered into at or before the time of such supply and specifically linked to relevant invoices; and
input tax credit as is attributable to the discount on the basis of document issued by the supplier has been reversed by the recipient of the supply.”
How does GST work?
GST, which was rolled out on July 1, 2017, is a comprehensive, destination-based, multi-stage tax levied at every value addition. It is paid during the time of procurement of goods and services and set off against that payable on the supply of goods or services. The wholesaler or manufacturer or retailer will incur the applicable GST rate, but will claim it back via the tax credit mechanism. This essentially means that every seller recovers tax from buyers, thus passing the burden of taxes to those who are the end users of goods and services.
To understand how GST works, consider the below example:
| Old System of Taxation | GST |
|---|---|
| Product is sold from Mumbai to Pune Price = Rs. 2,000 | Product is sold from Mumbai to Pune Price = Rs. 2,000 |
| VAT at 10% = Rs. 200 | CGST at 5% = Rs.100 + SGST at 5% = Rs. 100 |
| Product is sold from Pune to Chennai Cost = Rs. 2,200 Profit = Rs. 800 Sale Price = 3,000 | Product is sold from Pune to Chennai Cost = Rs. 2,200 Profit = Rs. 800 Sale Price = Rs. 3,000 |
| Central Sales Tax at 10% = Rs. 300 | IGST at 10% = Rs. 100 i.e. 300 - CGST (100) - SGST (100) |
| Cost of Product = Rs. 3,300 | Cost of Product = Rs. 3,100 |
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