A GST Calculator is an excellent tool you can use to determine the Goods and Services Tax (GST) amount you have to pay on the goods or services you purchase.

The GST calculator allows you to find out how much a product or service costs after GST imposition. GST is an indirect tax that came into effect on July 1, 2017. It is a multi-stage tax that is collected at the value-added addition of goods and services. The GST tax system has subsumed various indirect taxes that were a part of the old tax system. GST is a single indirect tax for the entire country, with its underlying principle being ‘One Nation, One Tax.’

You need to pay GST once you acquire a product or service. There are different GST rates for different categories of goods and services.

How do you calculate the Goods and Services Tax?

To determine the payable GST amount, you will have to enter the value of the goods or service into the software and the applicable GST slabs – 5%, 12%, 18%, or 28%. The GST calculator will display the product’s price, excluding GST based on the information you submit.

Adding GST

GST Amount = (GST x Original cost of the product or service) / 100

Net Price = Original value of the product or service + GST amount

Subtracting GST

GST Amount = Original cost of the product or service – [Original cost of the product or service x {100 / (100 + GST%)}]

Net Price = Original value of the product or service – GST amount

The effect of GST on Product Pricing

As mentioned earlier, there are five GST rates that range from 0% to 28%. These are 0%, 5%, 12%, 18% and 28%. Essential products and services are not taxable. However, you will find luxury items and services under one of the tax brackets mentioned above.

The finance minister suggested that the new tax rates would be more or less close to the old rates. There would be slight differences due to the changes in the Indian economy. Some items and services that fell in the 28% tax bracket were moved to the 18% bracket. In other words, some products and services that were initially considered luxurious were now essentials, and this is how the GST rates were revised.

GST Tax rates

Irrespective of one’s stance on the Goods and Services Tax, it can safely be said that the introduction and implementation of the GST bill was a major milestone in India’s financial history. The point of introducing GST slabs was to emphasize that not all goods can be taxed the same. Some goods and services are essentials, while others can be considered luxury items. There are primarily three types of GST:

• Central Goods and Service Tax (CGST), which is a tax levied by the central government on transactions that happen within the state.

• State Goods and Service Tax (SGST), which is a tax levied by the state government on transactions that happen within the state.

• Integrated Goods and Service Tax (IGST) is a tax levied by the central government on transactions between states.

These are the five different tax rates:

0%

GST 0% rate refers to essential commodities and services that people frequently use like milk, oil, magazines, potatoes, fresh fruits and vegetables, and so on.

5%

The GST 5% rate applies to items that are used commonly. These include processed foods, postcards and revenue stamps, organic medicines, tea, and many more.

12%

The GST 12% rate applies to items like kitchen utensils, trays, raincoats, cheese, butter, clarified butter, sewing machines, and so on.

18%

Most products and services that fall in this category are mentioned. Apart from those products, refrigerators, powdered chocolate, granite, and many more fall in this category.

28%

The goods and services that fall in this category include car parts, tobacco, motor vehicles, concrete, and so on.

The GST calculator is an indispensable tool if you wish to get an accurate idea of the GST amount you owe for your purchases.