The GST or Goods and Services Tax in short is a new, centralized and comprehensive indirect tax on the supply of goods and services replacing more than half of India’s indirect taxes. A GST calculator is an effective computerized tool that helps businesses, customers, and other experts, calculate the GST that has to be charged on a particular transaction or the GST that has been charged. It is, therefore necessary for both buyers and sellers to know exactly what proportion of GST applies in order not to be baffled about compliance under the law. Whether you run a business or are buying large quantities, knowing how to work with a GST calculator will deal with finances easier.
How Does a GST Calculator Work?
A GST calculator will add tax with an amount of transaction and a GST applicable rate to the respective product or service. This calculation can be done on various GST slabs, which currently stand at 5%, 12%, 18%, and 28%.
Here’s a quick way of finding GST through the calculator:
- On Tax Inclusive Price
GST Amount = Tax Inclusive Price × [GST Rate ÷ (100 + GST Rate)]
- On Tax Exclusive Price
GST Amount = Tax Exclusive Price × (GST Rate ÷ 100)
Simply inputting the necessary numbers in the calculator will already indicate to you the amount in total, inclusive or exclusive of GST, thus making it far easier for you to forecast the costs.
Advantages of using a GST Calculator
1. Accuracy: You will never go wrong with manually computing things. The accuracy of the GST calculator is guaranteed every time.
2. Time-Saving: It gives you instant answers, which means you can focus on other aspects of your business or transaction.
3. Simplified Budgeting: Knowledge of the GST amount will simplify budgeting for the business or consumer.
4. Compliance: A fast and accurate computation of your tax base ensures you do not miss out on your GST compliance.
Types of GST
India’s has several types of GST to suit the structure of the federal system.
1. Central Goods and Services Tax (CGST): This is an amount that will be collected by the central government when it sells its products within its jurisdiction. For example, if the sale is an intra-state sale, then CGST shall be made.
2. State Goods and Services Tax (SGST): Just like the CGST which will be levied on intra-state tally also it will be paid to the state government.
3. Integrated Goods and Services Tax (IGST): It is charged when the goods or services are sold between the states. The central government collects the IGST.
4. Union Territory Goods and Services Tax (UTGST): UTGST is charged while selling goods or services in the Union Territories where SGST has to be paid.
Conclusion
GST calculator is not avoidable for those involved with goods and services in India. The reason is that it helps to calculate the amount of tax correctly so that businesses are always within the book. So, with this knowledge of different types of GST, you will be aware of how structural tax is in different transactions. Most of the tools, such as 5paisa, do cover GST calculators, which makes financial planning easier.
