GST Calculation Tips – What Businesses Need

Irrespective of the kind of business you have, if you are an Indian entrepreneur, you have to pay a tax levied on goods and services, the GST or Goods and Services Tax. For business owners, the GST is applied to goods and services supplied to customers. All goods and services that fall within the tax slabs of GST have a tax levied upon them. If you are a business owner, you can easily use a GST calculator to compute the GST for various goods or services you may provide through your business. Nonetheless, you must grasp a certain method by which you have to pay GST, as you must make timely payments without any errors.

In case you are a business owner and a supplier of goods or services, you should know about GST calculation for goods and services applied at different locations, and regulations for different types of goods and services. Another aspect of GST calculation includes whether you are a retailer or a wholesaler. Consequently, you must grasp GST calculations in different business scenarios and avenues. However, first, you should understand more about the concept of GST.

How is GST amount calculated?

For Indian business owners, payment of GST is crucial to following the law, especially if you want your business to succeed and grow. A GST calculator may help you in efficiently calculating the GST that is to be levied on particular goods and services, but there are rules of GST you need to know other than just about how to calculate the tax.

Foremost, you need to be aware that GST is an indirect tax. It is levied on Indian goods and services. It is a value-added tax levied on goods and services. Furthermore, GST is a multi-stage tax that is destination-based. Under the GST law, there are different rates of tax applied to products and services. For instance, some goods and services have 0% GST, while others may be levied at 5% or 18% GST. The reason for the implementation of GST is the elimination of multiple indirect taxes, thus streamlining the Indian tax code. The introduction of GST also aims to improve efficiency in tax payment and enhance transparency in taxation throughout the tax regime. The GST has brought a lot of benefits to businesses in India, especially those in the small business category. A GST business loan can be availed of based on GST returns filed by any business.

Also Read: Everything MSMEs Need to Know About GST

GST Registration in India

From the perspective of Indian businesses, all businesses in India must register to pay GST. Every business that has its operations in India must register for GST. Nonetheless, there are certain stipulations of GST registration depending on the size of the business and the turnover. Once a business is registered under the GST regulation, it obtains a GST identification number. The GST is imposed on consumers buying goods and services and is collected by the business owners providing the goods and services. It is, thus, critical that you know how much GST to levy on any goods and services you sell if you are a business owner. A GST calculator can aid you in this.

For you to efficiently pay GST as a business owner, you must be able to efficiently collect the same from your customers. Therefore, before you know the different ways of GST applications for wholesalers and retailers, you should understand the different types of GST.

Also Read: All you need to know about GST Login Portal Online

GST – Different Kinds of Goods and Services Tax

Under the rule of GST law, the following kinds of GST prevail in the Indian business scenario. Your first tip for efficient GST payment is to know and understand more about the following kinds of GST:

• Central GST 
  The Central Goods and Services Tax or the CGST is a tax that is levied on the intrastate supply of goods and services.
• State GST 
  The SGST is a tax that is levied on goods and services within a state.
• Integrated GST 
  The IGST or the Integrated GST applies to goods and services that are transferred or carried between different states.
• Union Territories GST 
  The UTGST is a tax that applies to goods and services in the Indian Union Territories, namely Andaman and Nicobar Islands, Dadra and Nagar Haveli, Daman and Diu, Chandigarh, and Lakshadweep.

Tips to Calculate GST for Retailers and Wholesalers

If you are a retailer or a wholesaler, you have to know how to calculate GST so the appropriate amount of tax may be levied on the specific goods and services you provide. While there is a GST calculation formula, a GST calculator can help you to calculate the GST efficiently and easily. This is an online tool and is available free of charge. Here are some tips to calculate the GST efficiently:

• Understand the different rates for various products and services and then calculate GST applicable to products and services according to the appropriate GST rate.
• Depending on the goods and services applicable, the GST rates are 0%, 12%, 18%, and 28%.
• Make periodic checks about GST rates as they may be prone to change from time to time on certain goods and services.
• Use a GST calculator to compute GST rates.
• Know the GST rates applicable in different Indian states, especially if you are doing business across states and cities.
• As a business owner, if you are within the GST regime, you are liable to adhere to GST regulations and establish your goods and services costs. Abiding by GST regulations will also ensure that business owners can obtain ITC or Input Tax Credit.
• In case you are an Indian manufacturer of goods falling within GST regulations, you are responsible for paying the Goods and Services Tax on the value that is added to any products or services while in production and on the buying of raw materials.
• If you are an Indian service provider, you are liable for GST on the product purchase price and any value additions made to the product.
• As an Indian retailer, you are liable to pay tax on the margin contributed as well as the goods you purchased from your distributor.

Efficient GST Calculation with Knowledge

To provide transparency and efficiency in India’s tax structure, the Indian government began to implement the GST. As multiple taxes that business people were liable for came under a single tax regulation, the efficiency and efficacy of payment of taxes were established. Apart from these obvious benefits, the GST has enabled business owners to take a GST business loan, as well as help businesses follow tax laws effectively. If you are a business owner, initially, you may find it hard to calculate GST on goods and services, but online tools can help you in your endeavour. Once you know the different rates applicable to the goods and services you provide and the rates aligned with where you conduct your business, GST calculation is quite simple to execute.

Frequently Asked Questions

How do you calculate 18% GST?

To calculate 18% GST on a product or service, you need to multiply the original cost by 0.18. For example, if a product costs Rs. 100, then the GST amount will be 100 x 0.18 = Rs. 18. The total price including GST will be 100 + 18 = Rs. 118.

How do I calculate the GST in a total?

To calculate the GST in a total price, you need to divide the total price by 1.18 and then subtract the original cost from it. For example, if the total price is Rs. 118, then the original cost will be 118 / 1.18 = Rs. 100. The GST amount will be 118 – 100 = Rs. 18.

What is GST rate?

The GST rate in India varies depending on the category of goods and services. There are four main GST slabs: 5%, 12%, 18% and 28%. Some goods and services are exempt from GST or have a lower rate of 3% or 0.25%. Some goods and services also attract a cess in addition to the GST rate.