Goods and Service Tax or GST is payable by every customer on the net price of an item which can be a service or product. As a result of this GST, the gross price of an item increases. Using a GST calculator, you can easily calculate the amount of GST and the gross price you will have to pay against the item. 

Nevertheless, before knowing how to leverage the GST calculator, you should have a brief idea about GST and its types.

What is GST?

The Government of India replaced several indirect taxes, like service tax, VAT, excise, etc., and subsumed all those under the Goods and Service Tax or GST. The main objective of GST services is to reduce the challenge of cascading taxation by enabling a comprehensive mechanism that measures the input and output tax of a business.

In India, the GST paid by a business or individual customer goes to the taxation departments of state and central government. Wherein the state government gets State GST or SGST, the central government gets Central GST or CGST. Apart from this, individuals need to pay an Inter State GST or IGST for trading in goods and services between different states in India.

What is the GST Calculator?

A GST calculator is an online tool that can help you know the indirect tax liability for purchasing an item. You can also understand a product’s net or gross price by leveraging this calculator. For this, you just need to enter the required input values, such as the GST rate, net price of a product, etc. So, before calculation, you need to know the applicable GST rate on the product that you will purchase or sell.

There are four GST rate slabs in India, which are 5%, 12%, 18% and 28%. The GST Council determines this rate according to a product or service category. Products like tea, sugar, edible oil, etc., come at a 5% GST rate, whereas you have to bear a GST rate of 18% for items like toothpaste, soap, etc.

How to Use a GST Calculator

You can find this calculator on websites of most financial product/service providers. Most of these calculators will let you leverage it as a buyer, manufacturer and retailer. As a buyer, you can understand the gross price of a product or service. On the other hand, you can understand the total production cost of a product as a manufacturer or retailer.

Here is a step-by-step process for using a GST calculator:

Step 1: Access a GST calculator from a website

Step 2: Mention whether you are a buyer, manufacturer or retailer

Step 3: Enter input values like GST rate, net price (for buyers), and cost of production/goods and profit ratio (for manufacturers/retailers)

After this, you will get the total tax amount you are liable to pay. It will also show you the CGST and SGST break-ups of your total payable indirect tax and the gross price (for buyers) or total production cost (for manufacturers/retailers) on an item. 

Mathematical Formula Integrated in a GST Calculator

This calculator is basically a computerised program based on the mathematical formulas of GST, as mentioned below:

GST amount = (Net price of a product x applicable GST%) x 100

Here, the gross price or GST-included price of an item = (Net price of the item + GST amount)

Nevertheless, when the GST rate and gross price are given, this calculator uses another mathematical formula to know the indirect tax amount, as stated below:

GST amount = Gross price – {gross price x {100 / (100 + applicable GST%))

Here, the net price or GST – excluded price of an item = (Gross price – GST amount)

Benefits of Using a GST Calculator

Following are some notable benefits you can get by using this GST calculator:

  • Faster Calculation

You just need to spend time entering the required inputs in the calculator. It will take mere seconds to produce the result you want. So, it can save much of the time you will need for a manual calculation.

  • Error-Free Results

The major advantage of this calculator is its accuracy. If you calculate the GST manually using mathematical formulas, it will not only consume your time, but you can also commit mistakes. However, being a computerised tool, you can get the correct result from the GST calculator every time.

  • GST Breakups

Using this calculator, you can also understand how much SGST and CGST you pay against the net price of an item. Generally, the total GST amount is equally divided into CGST and SGST.

You do not need to be a mathematical genius to measure the gross selling price of an item using the GST calculator. Further, manufacturers can also easily leverage this tool to understand the total GST-included cost of production. You can get error-free results instantly after entering the necessary variables.

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