The arrival of GST has redesigned the entire tax system of India, making it more transparent and convenient for both sellers and buyers. Subsuming several indirect taxes and implementing a ‘single taxation’ system has given an excellent boost to the Indian economy by increasing the overall government revenue.
Even though the incorporation of electronic invoicing, Aadhaar-based GST registration process, etc., have led to better revenue, some individuals are still unaware of their tax liabilities. To help them out, online tools like the GST interest calculator are available on several accounting websites to calculate it without a hassle.
However, the GST calculation will be accurate if only individuals are fully aware of different GST rates applicable in different categories.
Steps to calculate GST online India
To calculate GST online in India, individuals can use tools like GST interest calculator. The easy access to internet facilities and the emergence of online tools have made such calculations easier.
All you have to do is enter the necessary inputs and get instant yet accurate results within a few minutes. In this case, the process to calculate GST online is mentioned below:
Step 1: Use any GST calculation tool online and start by entering the GST rate among 5%, 12%, etc.
Step 2: You also need to enter the net price of the product.
Step 3: Click on the ‘calculate’ button to get the final or gross price of the goods and services applicable.
Different tax heads under GST
GST is categorised under 4 different heads, State Goods and Services Tax, Central Goods and Services Tax, Union Territory Goods and Services Tax, and Integrated Goods and Services Tax.
SGST is collected by the State Government, while the Central Government is in charge of collecting CGST. The Union Territory Government collects UTGST, and IGST, charged for interstate supplies, is collected by the Central Government for inter-state transactions and imports.
In order to calculate GST like a pro; individuals should be aware of its 5 different slab rates first, which are 0%, 5%, 12%, 18% and 28%. Once the slab rate is determined, individuals need to check the place of supply as that will help them understand which category would apply to that transaction.
GST calculation formula
Taxpayers can evaluate the GST amount using the following formula:
- Adding GST to base amount:
GST Amount: (Original Cost * GST%) / 100
Net Price: Original Cost + GST Amount
- Removing GST from base amount
GST Amount: Original Cost – [Original Cost * {100 / (100 + GST%)}]
Net Price: Original Cost – GST Amount
Example: Now, to understand the aforementioned formula, assume that a product is sold for Rs.1,000 and GST levied on that particular product is 12%. Using this formula, you can evaluate the net price of that product: (Rs.1,000 + 12% of Rs.1,000 = Rs.1,120). It is pretty evident that the GST formula can be tricky at times; therefore, to ensure the results are accurate, taxpayers can consider using a GST interest calculator for the same.
Note that calculating the GST liability is necessary for business owners, wholesalers and retailers in order to understand their working capital requirements. Even though the simplification of GST rates had a substantial impact on the manufacturing sector with the reduction in the cost of production, SMEs often struggle with cash crunch.
In that case, opting for credit facilities like business loans becomes necessary to run the daily operations smoothly. Thankfully, financial institutions are also providing pre-approved offers on different financial products, including business loans, personal loans, credit cards, etc. This makes financing less time-consuming and also a lot more affordable.
So, make sure to assess your monthly obligations using a business loan calculator and, to negotiate further, check your pre-approved offer by submitting your name and contact details.
As per reports, GST collections hit a high record in December 2020. Small business owners whose annual turnover is between Rs.20 lakh and Rs.75 lakh can also benefit from the GST composition scheme. This allows them to avoid tedious GST formalities and pay GST at a fixed rate. However, one must evaluate the tax liability using a GST interest calculator to understand the difference and make the most of these benefits.