Government of India introduced Goods & Service Tax (GST) with effect from 1st July 2017 under the theory of "One Nation, One tax" to achieve the principal objective of eliminating the cascading effect of taxes. Various indirect taxes happening at multiple stages of the supply chain like the Value Added Tax (VAT), Service Tax, Central Sales tax (CST), Excise Duty, Octroi were subsumed into one as GST.Experience GST Billing software
Goods & Service Tax (GST), as the name indicates, is a levy of tax on the supply of goods or services. It comes within the indirect tax category, as it is generally collected from the buyer/recipient of goods/services by the seller/provider of the same.
GST follows the Value-Added or Input-tax-credit system wherein the GST paid on inward supplies is adjusted against the GST collected on outward supplies to arrive at the net GST payable to the Government monthly. Outward supplies means revenues earned from the sale of goods or providing of services and Inward supplies means the cost incurred to earn the revenue on account of the purchase of goods or receipt of servicesKnow more about GST software
The government collects GST in four forms based on the incidence of taxation, also called the Place of supply or Destination based taxation system.
Central GST (CGST) - Central Government's 50% share of GST is charged on Intra-state or Intra-UT transactions that is sale transaction within the same state or the same Union Territory.
State GST (SGST) - State Government's 50% share of GST is charged on Intra-state transactions, that is, sale transactions within the same state.
Union Territory GST (UTGST) - Union Territory Government's 50% share of GST charged on Intra-UT transactions that is sale transaction within the same Union Territory. As per the recent GST council pronouncements, the following 5 regions are considered as Union Territories under the purview of GST
Integrated GST (IGST) - Central Government charges IGST on Inter-State, Inter-UT, import, and export transactions that are sale transactions across states and/or union territories or across countries.Try Gofrugal for all GST needs
Any business whose turnover exceeds INR 40 lacs in a financial year is liable to get himself registered under the GST laws, collect-cum-remit the taxes and file the necessary GST returns prescribed from time to time. This 40 lac limit is, however, for a supplier of goods and for a service provider, the said limit is 20 lacs.
There are also some special category states like Arunachal Pradesh, Assam, Jammu & Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand, wherein the said limit is 20 lacs and 10 lacs for supplier of goods and service provider respectively. There is also a Composition scheme providing concessional rate of GST for businesses having turnover not exceeding 1.5 crores in a financial year on satisfaction of specific conditions.Talk to our regional business consultant
The GST council of India has broadly categorized all goods & services into five tax slabs, namely 3%, 5%,12%,18% and 28%. In addition, there is a 0% rate (Nil-rated supplies) for essential goods like salt, jaggery, and cereals. Some of the items are exempt under the GST law (Exempt supplies) like fruits & vegetables and some of the items do not come within the purview of GST (Non-GST supplies) like petrol/diesel and alcohol.
Exports and Special Economic Zone (SEZ) supplies are treated as Zero rated supplies. Also, for some items like tobacco, cigarettes, and pan masala, an additional levy called GST compensation cess is charged besides the GST regular charge.Experience Gofrugal with pre-defined rates
To calculate GST, one must know the
A retailer has to first ascertain the selling price of the supply according to the valuation rules under GST law
All goods and services are commonly categorized under a unified tax system using a Harmonized System Nomenclature (HSN) code or a Servicing Accounting Code (SAC) for goods or services, respectively. The GST Tariff table specifies the GST rate for each HSN/SAC code.
The retailer has to ascertain the HSN/SAC under which product/service supply has to be classified. Once that is finalized, then its corresponding GST rate can be easily identified.
Identify the from state and to state between which product/service is supplied. If both states are the same, then the transaction becomes an Intra-state supply and if they are different, then the transaction becomes an Inter-state supply. CGST & SGST would apply to Intra-state supply and IGST would apply to Inter-state supply. Hence determining the type of supply (inter-state or Intra-state) would help in deciding the type of GST(s) that would be applicable to the particular transaction.
Select whether GST is to be calculated on the Inclusive method or Exclusive method. According to the method of GST, the calculation formula will vary.
Inclusive method means the price determined includes the GST amount also, such that the final net price to the customer is fixed and the base value or taxable value on GST calculation has to be made. Base value or taxable value is arrived based on the reverse/back working method.
Exclusive method means the base value or taxable value of the supply is first determined which does not include the GST amount in it. GST is calculated on this base value or taxable value and the final net price is arrived at by adding the GST amount to the base value or taxable value.
In the Exclusive method, GST calculation formula is as follows: GST amount= Value of the supply x GST rate / 100 Net price= Value of the supply + GST amount The Value of the supply is also called the base value or taxable value or assessable value
If Value of supply is ₹ 1000 and GST rate is 5%, then GST amount= 1000 x 5 / 100 = ₹ 50 Net price= 1000 + 50 = ₹ 1050
In the Exclusive method, GST calculation formula is as follows:
GST amount= Net price x GST rate / (100+GST rate)
Value of the supply= Net price - GST amount
The Value of the supply is also called the base value or taxable value or assessable value
Net price is the GST Inclusive price fixed for the product or service
If Net price is ₹ 1000 and GST rate is 5%, then
GST amount= 1000 x 5 / (100+5) = 1000 x 5/105 = ₹ 47.62
Value of the supply= 1000 - 47.62 = ₹ 952.38
Conversely, to prove the above values in Exclusive method GST amount952.38 x 5 / 100 = ₹ 47.62 Net price952.38 + 47.62 = ₹ 1000
As explained above on types of GST, CGST and SGST would apply to Intra-state transactions with equal share to Central and State governments. In the case of Intra-UT transactions, CGST and UTGST would apply with equal share to Central and UT governments.
CGST rate= GST rate / 2
SGST or UTGST rate= GST rate / 2
CGST amount= Value of the supply x CGST rate / 100 SGST or UTGST amount= Value of the supply x SGST or UTGST rate / 100
Net price= Value of the supply + CGST amount + SGST or UTGST amount
If Value of supply is ₹ 1000, GST rate is 5% and a transaction happens within the state of Maharashtra, then CGST rate= 5% / 2 = 2.5% SGST rate= 5% / 2 = 2.5% CGST amount= 1000 x 2.5 / 100 = ₹ 25 SGST amount= 1000 x 2.5 / 100 = ₹ 25 Net price= 1000 + 25 + 25 = ₹ 1050
If the above sale transaction happens within the UT of Chandigarh, then CGST rate= 5% / 2 = 2.5% SGST rate= 5% / 2 = 2.5% CGST amount= 1000 x 2.5 / 100 = ₹ 25 SGST amount= 1000 x 2.5 / 100 = ₹ 25 Net price= 1000 + 25 + 25 = ₹ 1050
In the case of Inter-State or Inter-UT, IGST would apply at the applicable GST rate IGST rate= GST rate IGST amount= Value of the supply x IGST rate/ 100 Net price= Value of the supply + IGST amount
If the value of supply is ₹ 1000, GST rate is 5% and transactions happening between
then IGST would apply in all above scenarios, with IGST rate = 5% GST amount= 1000 x 5 / 100 = ₹ 50 Net price= 1000 + 50 = ₹ 1050Automate your GST classification with Gofrugal
Gofrugal's GST software helps you to operate your business efficiently with minimal staff and the least skills.
GST calculator is a simple tool to ease GST payable calculation on the value of products/services. The purpose of GST calculator is to automate the GST calculation under the various combinations of GST methods/types/rates for a given value.
Gofrugal GST calculator requires four inputs to perform the GST calculations -
GST calculator can be used by any retailer, wholesaler/distributor, manufacturer, buyer, consumer, service provider, service receiver belonging to any trade, business, service or commerce
GST calculator simplifies the GST calculations such that it eliminates the manual effort, thereby producing error-free calculations. Users can play around with the GST calculator tool with multiple combinations of GST rates, types or methods for any given value of the transaction. Pre-tax, GST tax breakups and post-tax values can be calculated in one shot and viewed in one glance.
Assessable value, also called the Base value or Taxable value, is the value on which GST rate is applied to calculate the GST amount.