GST calculator briefing SGST, CGST, IGST, GST calculation with an example, how the GST system works, comparison of GST and previous tax system
GST Calculator is used to calculate how much tax is to be paid for every product and service, after the implementation of the new tax system, GST. Based on the type of product and services, taxes are levied at 4 different percentages such as 5%, 12%, 18%, 28%.
Ours is a democratic country with the separation of powers between the state and central government. It has clear provisions for the collection of tax between the state government and the central government. For the interstate and intrastate tax collections, CGST, SGST and IGST are used under the GST system. Before getting into the calculation of GST, one should know what are SGST, CGST and IGST.
What is CGST?
CGST is a short form of Central GST by which the taxes are levied by the central government. It comes under the act of Central goods and services act, 2016. This gives revenue for the central government. All the central government based taxes subsumed under this.
What is SGST?
SGST is a short form of State GST by which the taxes are levied by the state government. It comes under the act of State goods and services act, 2016. This tax gives the income to the state government and all the pre-collected state taxes are merged under this one.
What is IGST?
IGST is a short form of Integrated GST which is used for the collection of tax between states and the union territories. It also comes under the act of integrated goods and services act, 2016. It is levied by the central government. Revenue from this tax will be shared between the state and central government. IGST will be levied on the goods and services that are imported to India. The importer can claim the input credit paid on imports. No change is made to the exports side under GST. Former scenario will be continued.
How the System of SGST, CGST and IGST Works?
The cascading effect of the previous tax system eradicated with the GST system. Sales within the state are levied with both SGST and CGST. Sales outside the state are levied only with IGST. So a taxpayer can easily claim the Input Tax Credit (ITC). To settle the tax payments between states in case of interstate trade, one has not to deal with the state government. That state directly approach the central government to claim the input credit of the trade. In the former case, VAT is levied on interstate sales. This VAT amount varies between states. Now in GST, only IGST levied that same tax amount among states.
Here is the complete guide about GST.
For example, if sales of product are done between districts of a state for Rs.1000, SGST and CGSTwill be applied.
CGST – 5% = Rs.50,
SGST – 5% = Rs.50, totally Rs.100 will be added to the cost.
So,the price of the product = Rs.1100.
Then if the product sold to other state along with profit, say for example, Rs.1000, the total cost of the product is Rs.2100.
Now here IGST will be applied.
IGST – 10% = Rs.210.
Now this IGST – Rs.210 is subtracted with SGST and CGST.
IGST – (SGST+CGST) = Rs.210-Rs.100 = Rs.110.
That is the cost of the product – Rs.2100+Rs.110 = Rs.2210
If we calculate in the same way with VAT and CST, the product will cost Rs.2310.
Thus, the cost of the product is lowered as there is ITC (Input Tax Credit) in GST.
The table given below compares both the tax systems.
|PREVIOUS TAX SYSTEM||SYSTEM UNDER GST|
|Price of an item sold between states, for example from state A to state B =Rs.5000||Price of an item sold between states, for example from state A to state B =Rs.5000|
|Adding VAT (10%)
|Adding CGST (5%) & SGST (5%) – Rs. 250+ Rs.250
|Sales price of the item
|Sales price of the item
|Adding CST (10%)
= Rs. 650
|Adding IGST (10%) & subtracting previously added CGST and SGST – Rs. 650–Rs.500
|So, the price of the item
|So, the price of the item
= Rs. 6650
How to Calculate Tax under GST?
To calculate the GST of a product, we must follow few steps.
First, we have to find the correct GST rate (that what percentage is to be applied as we have different slab rates) applicable for the product or the service. With the help of the HSN and SAC code, one can easily find the GST rate.
HSN code is given for all the goods come under GST and the SAC code is given to all the services under GST.
Then SGST, CGST and IGST are to be determined from the place of sales of the producti.e., within state or between states. We know for interstate supply SGST and CGST are applied, and for intrastate supply, IGST is applied.
Then, to avail the input credit and other things, one has to verify the supplier enrolment, GSTIN, type of transaction whether it is among businesses or business to consumer.
Then we have to do normal calculations.
Find the percentage amount of the GST rate. Add this amount to the sales price of the product.
Example – if product sold for Rs.3000 with GST rate 18%,
18% of 3000 = 3000 x (18/100)
So, the net cost =3000+540
This is how the GST rates are calculated and collected along with every purchase.