Introduction

The Goods and Services Taxes (GST) is an improved version of the Value Added Tax (VAT) system. GST is a form of indirect tax liable for the supply of goods and services. Upon its implementation in 2017, it created an efficient and cost-effective tax system for businesses and customers. 

Steps to Use a GST Calculator

Calculating GST on a particular commodity or service is a relatively easy process that enlists four time-saving steps:

Step 1: Identify the type of GST

There are four major types of GST

1. CGST- Levied by the Central Government
2. SGST- Levied by the State Government
3. UGST- Levied by the Union Territories 
4. IGST (Integrated GST)- Levied by inter-state transaction of goods and services.

Step 2: Find the applicable (by the nature of your business) GST Rate

The GST rate in India typically falls under one of the following categories-

1. The 0% GST rate is usually for businesses that sell local fresh produce, meat and dairy products, books, and education-related material.  
2. The 5% GST rate is usually for businesses that make sales of goods like branded utilities (for example: branded cereals and pulses), other goods like edible oil, coal, and domestic LPG; and service sectors like transport and restaurant services.
3. The 12% GST rate is usually for businesses that make sales of goods like processed goods, industrial products (for example: waterpipes); and service sectors like hotel accommodation and construction services.
4. The 18% GST rate is usually for businesses that make sales of goods like electronic appliances, industrial and agricultural machinery, and equipment; and service sectors like telecommunication services and financial services.
5. The 28% GST rate is usually for businesses that make sales of goods like luxury goods (for example high-end motor vehicles), consumer durables; and service sectors like entertainment services, betting, gambling, and hotel accommodations.

Refer to the latest GST rate schedules issued by the government and for more information, refer to: ​​https://gstcouncil.gov.in/

Step 3: Gathering Necessary Details

To have accurate calculations, you need to gather details like:

1. Net Amount- Net Amount of any good or service refers to its value before the addition of taxes. 
2. GST Rate- It is essential to know the applicable GST Rate (more in “Step Two”) to have clarity on the value of the goods and services and for compliance with the tax laws.

Step 4: Use GST Calculator 

A GST Calculator is a ready-to-use online-based method through which a business can calculate the payable GST- monthly or quarterly. 

The calculator of the applicable GST may defer from sectors- manufacturing, productions, services, and so on.

A generic GST calculator for any business sectors uses the following formulae-

Where GST is excluded:

GST Amount = (Value of supply x GST%)/100

Price to be charged = Value of supply + GST Amount

Where GST is included in the value of supply:

GST Amount = Value of supply – [Value of supply x {100/(100+GST%)}]

To use a GST Calculator to its full efficiency, you must:

1. Input the Net Amount or Base Price in the GST Calculator;
2. Select the applicable GST rate from the options provided (0%, 5%, 12%, 18%, 28%);
3. Press on Calculate and the result should be on one’s screen.

Example of the GST Calculator-

1. Input the Net Amount: Net Amount: ₹15,000
2. Select the GST Rate: GST Rate: 18%
3. Calculate:
   1. GST Amount = ₹15,000 * 18% = ₹2,700
   2. Total Amount = ₹15,000 + ₹2,700 = ₹17,700

By following these steps accurately:

1. You enter ₹15,000 in the “Net Amount” field.
2. You select 18% from the “GST Rate” options.
3. The calculator then computes the GST amount (₹2,700) and the total amount (₹17,700).

Many online platforms offer free GST calculators, such as:

1. Government Websites: The official GST portal often provides a calculator.
2. Tax Consultancy Websites: Many offer user-friendly GST calculators.
3. Accounting Software: Software like Tally, QuickBooks, and Zoho Books includes integrated GST calculators.

Advantages of a GST Calculator

1. Simplicity: The GST Calculator found online is meant to offer you the comfort of calculating your taxes, even if you have basic knowledge of GST.
2. Accuracy: Upon selecting the applicable GST rate, as mentioned on https://gstcouncil.gov.in/ it minimizes the room for error.
3. Clarity: Using a GST Calculator gives one the clear functionality of the taxes imposed and the net amount of the goods and services.
4. Distinction: It helps you distinguish CGST and/or SGST.

Conclusion 

Using a GST calculator is a practical and efficient way to manage your business’s tax obligations. By following the outlined steps—identifying the type of GST applicable, determining the correct GST rate, gathering necessary details, and accurately inputting these into a GST calculator—you can simplify and streamline the tax calculation process.