Online Indian GST Calculator
To Learn GST, it is necessary that one should understand the Indirect Tax system in India. Direct Taxes like income tax are paid by the person subjected to pay the tax. This means that the responsibility of the tax can’t be transfer to anyone else. The responsibility of an Indirect Taxes on the other hand can be given to another person. So, the person accountable to pay the tax can collect the tax from someone else and then pay it to the government, thus transferring the tax burden. The GST tax comes in this category.
The Current Composition of Indirect Tax, which contains so many different taxes can be classified as:
Central Taxes: Imposed by the Central Govt (Contains Central Sales Tax, Excise Duty etc.)
State Taxes: Collected by the different state govts (VAT, Service Tax, Octroi)
The Current form of indirect tax has one big problem the cascading effect. When you Buy anything, you pay a tax on tax itself.
If a Cloth manufacturer pays 100 INR to buy raw materials. And the tax rate is 10%, (If no profit or loss is deemed) then the tax paid by him would be 10 INR.
Hence final cost of the product will become (100 + 10) = 110 INR.
At another level, If the wholesaler buys the cloth through the manufacturer at 110 INR, and add tags to it. Adding tags is increasing its value hence cost will rise also. For example, if tag value increases 40 INR. Over it he also has to pay a 10% tax and the total cost of the final product will become (110+40) = 150 + 10% tax = 165 INR.
Then if the retailer pays 165 INR to purchase the cloth from the wholesaler because the tax accountability has passed on to him. He has to pack the cloth and doing so is adding the value to product again. Let’s assume this time added value is of 30 INR. Now when he sells the cloth, he has to pay VAT to the government on final cost. Hence the cost of the cloth becomes 214.5. Now do breakup of this Cost = 165 INR + Value Increase = 30 INR + 10% tax = 195 INR + 19.5 INR = 214.5 INR. Hence, Customer will purchase the cloth at 215.5 INR the cost price of which was only 170 INR.
What is GST & Why it is Important
GST is an extensive, multi - Level, destination targeted consumption tax on carried at every stage of value addition in the lifecycle of a product. To Learn this better, let’s talk in detail:
Extensive: GST brought unified taxation system, along the country to ensure no more irregularity in tax rates. It will nullify all previous taxation system.
Multi - Level: GST is charged at each level of supply chain, where a transaction takes place or Value is added but exclusive of initial costs.
Destination Targeted Consumption: Unlike the indirect tax, GST will be collected at the point of consumption. The taxing authority with proper jurisdiction in the place where the goods / services are finally consumed will gather the tax.
CGST and IGST are fragment of GST, Goods and Service Tax. CGST known as Central Goods and Service Tax and IGST is the short form of Integrated Goods and Service Tax.
How to Calculate GST
If CGST & SGST/UTGST is to be applied, then CGST and SGST both amounts are half of the total GST amount.
GST = Taxable Amount x GST Rate (% In Percentage)
GST excluding amount = GST including amount ÷ (1+ GST rate ÷ 100).
For example: GST including amount is Rs. 630 and GST rate is 5%.
Price Excluding GST = 630 ÷ (1 + 5 ÷ 100) = 600 INR
GST Tax Rates Slabs in India
0.25%: Semi polished stones fall under this slab.
5%: Household requirements for example oil, sugar, spices, tea, edibles, coffee, Mithai, Coal & Lifesaving medical drugs.
12%: Computers and processed foods.
18%: Toothpaste, Hair Oil, Soaps, Capital Goods.
28%: Luxury Items, Cars, AC, Fridge, Cigarettes, Aerated drinks, Motorcycles.
How and When to File GST Returns
A return is submitted and a tax payer is needed to file according to the law with the tax administrative agency. Under GST law, a regular tax payer will be required to submit three returns monthly and one annually.
Currently, businesses and organizations with turnover of up to 20 Lakhs Indian Rupee are exempted from GST Registration and GST exemption limit for north estates is 10 Lakh INR.