All That You Need to Know About GST Calculation In India

By: alexander

In order to unify various taxes and come up with an integrated tax regime, GST was introduced. The tax has subsumed all the taxes which were earlier levied by the government in the name of entertainment tax, luxury tax, value-added tax, custom duty and similar. However, this destination-based tax policy has been causing trouble to every taxpayer. Complying with it is difficult as GST calculation in India is completely different than the way taxes were calculated in the country earlier. That’s why business owners are looking for ways to understand the procedure of GST calculation in India so as to increase their GST compliance rating.

Hence, in this post, we provide you the essential details pertaining to this new change. Take a look.

Types of GST

The goods and services tax (GST) is broadly divided into three categories, thereby subsuming all the taxes which were imposed earlier. The three taxes levied now are:

1. CGST (Central Goods and Services Tax) – The tax is charged when the transaction is intra-state. It is paid to the central government in place of VAT and services tax.

2. SGST (State Goods and Services Tax) – This tax is levied when the transaction is intra-state. It is paid to the state government in place of the VAT and central excise.

3. IGST (Integrated Goods and Services Tax)- In Inter-state transactions, a part of the tax is paid to central and state government and not Central sales tax and services tax separately.

Rate structure of GST

With the change in taxation regime, there has been a change in the rate of the products as well. As per the latest changes made, the percentage is as follows:

1. Products which are below Rs.1000 enjoy zero percent tax rate. Few of the cosmetics, hotel-services, dried vegetables, animal products and similar come under this category.

2. Earlier rough industrial diamonds used to have a rate of 3% tax, now, the rate is 0.25%.

3. Restaurant food, online food orders, and transportation are imposed with 5% tax rate.

4. Kits used for diagnosis, indoor games, refined sugar, sewing machine, furniture,clay products and similar are charged with 12% tax.

5. Electricals, sanitary ware, granites, marble, speakers and musical instruments come under 18% slab.

6. The highest tax rate of 28% is for telecom services, finance related services and branded merchandise, office apprentices.

GST amount calculation

Calculating GST is not as complex as it seems to be. In order to calculate total GST amount that is to be levied on a particular supply you need to follow the procedure mentioned below-

Addition of GST:

GST amount = The original cost of the product and the percentage of GST charged should be divided by 100.

Net price = Original cost + GST charged

Subtraction of GST:

GST amount = Divide the sum of 100 and GST percentage levied by 100. Multiply the actual cost of the product by it then.

Net price = Actual price – GST amount

Benefits of calculating GST

1. It is simple

This indirect taxation policy has subsumed many taxes. The process in actual was more complex earlier than now. All this helps in making the GST calculation in India process a lot more simple, easy and quick.

2. It simplifies the taxation structure

The tax system in the country was quite troublesome earlier as while levying the tax, one has to mention the amount separately for each of the tax. Besides, one also needs to understand fewer jargons now.

3. The classification of rate scheme is realistic

The clear division of distinct products and services under different slabs have made it easy for the user to find the rate of the product they are selling.

4. Profits the traders and sellers

The individuals who pay their taxes and file for tax returns timely get the refund according to their tax payments. Prices have also reduced because of input tax credit.

5. Price rise has declined

The selling amount has seen a drop in inflation. Due to this, the economy of the country has got affected too.




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