How To Calculate GST?

Goods and Services Tax or GST is an indirect tax which is levied on manufacture, sale and consumption of goods and/or services. GST laws came into force on 1st July, 2017 and subsumed majority of the indirect taxes like sales tax, service tax, VAT, etc. The introduction of GST bought a major reformation to the taxation field as well as to the economy.

Rates of GST

The GST rates are divided into 6 parts: 0.25%, 3%, 5%, 12%, 18% and 28%. The details are:

GST Rates

There are also some GST items which are zero rated. These items are as follows:

GST Zero Rated Items

How to calculate GST?
The formula to calculate GST is as follows:
1. Add GST:
GST Amount = (Original Cost x GST rate)
Net Price = Original Cost + GST Amount

Illustration:
Let’s assume that a product is sold for Rs. 5,000 and GST applicable to that product is 5%.
GST Amount = Rs. (5000 x 5%) = Rs. 250
Net Price = Rs. (5,000 + 250) = Rs. 5,250

2. Remove GST
GST Amount = GST included amount / (1 + GST Rate)

Illustration:
Let’s assume that GST included amount of the product is Rs. 5250.
GST Amount = Rs. 5250 / (1 + 5%) = 5250 / 1.05 = Rs. 5,000

Now keep this formula in mind while calculating your GST liability.

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