How GST is Calculated?
When it comes to calculating Goods and Services Tax (GST), the process is relatively straightforward and involves multiplying the taxable amount by the GST rate. However, in scenarios where both Central GST (CGST) and State/Union Territory GST (SGST/UTGST) are applicable, the total GST amount is divided equally between them. Let me break it down for you:
To calculate the GST, you can use the following formula:
GST = Taxable Amount x GST Rate
In situations where you already have the amount that includes GST and you wish to determine the GST-exclusive amount, you can utilize the formula provided below:
GST excluding amount = GST including amount / (1 + GST rate/100)
Let's consider an example: Suppose the GST including amount is Rs. 525 and the applicable GST rate is 5%.
To find the GST excluding amount, you can apply the formula as follows:
GST excluding amount = 525 / (1 + 5/100) = 525 / 1.05 = 500
What is the percentage of GST in India?
The Goods and Services Tax (GST) rates are categorized as follows:
- 0% (necessity items like milk, wheat flour)
- 0.25% (rough diamonds)
- 3% (gold, silver etc.)
- 5%
- 12%
- 18%
- 28%
The majority of goods are classified under the categories of 5%, 12%, and 18% GST rates, while most services fall within the 18% category. Certain items such as cement, cars, and tobacco attract a GST rate of 28%. Additionally, there is a Cess imposed on specific goods like cars and tobacco, and also on pan masala.
Furthermore, there are certain goods and services that either have a GST rate of NIL, meaning no GST is applicable, or they fall under the exemption category where they are exempted from GST altogether. These exceptions ensure that certain essential items or services are not burdened by additional tax obligations.
In summary, the GST rates encompass a range of percentages for goods and services, with higher rates for specific items, while some goods and services enjoy a NIL rate or are exempted from GST. These provisions aim to strike a balance between revenue collection and facilitating the accessibility of essential goods and services.
Calculation of GST in case of reverse charge?
Under the reverse charge mechanism, the calculation for GST remains the same. For instance, if you purchase goods worth Rs. 5,000 and are required to pay GST on reverse charge at an 18% rate, the GST on reverse charge amount would be Rs. 900 (5,000 x 18%). If CGST and SGST apply, you would need to pay CGST and SGST of Rs. 450 each.
