GST (Goods and Services Tax) is a single indirect tax aimed at making the country a unified common market. It is imposed on the supply of goods and/or services within India. Multiple indirect taxes that the Central Government or State Governments impose on suppliers and consumers are subsumed by GST.
GST Calculator
A GST Calculator is an effective tool that can be used to calculate the cost of products and services. A GST Calculator is available to help you determine the amount of tax applicable to a certain commodity or service. The formula for the addition of GST is as follows:
GST Amount = (Original Price x GST Rate) / 100
Net Price = Original Price + GST Amount
For instance, if a commodity is sold from Mumbai to Bengaluru for Rs.5000, and the rate of GST is 12%, the GST amount applicable to the product will be (5000 x 15) / 100 = Rs.750; and the net price will be Rs.5000 + Rs.750 = Rs.5750.
The formula for the removal of GST is as follows:
GST Amount = Original Price – (Original Price x (100 / (100 + GST Rate)))
Net Price = Original Price – GST Amount
Calculation of Tax under GST
Here is a table that shows a contrast between the amount of tax applicable under the previous taxation system and the amount charged under GST (Tax rates have been assumed for the purpose of this example):
| Details | Tax under Previous Regime | Tax under GST |
|---|---|---|
| Value to Manufacturer | ||
| Production cost | Rs.2 lakh | Rs.2 lakh |
| + Profit Margin (10%) | Rs.20,000 | Rs.20,000 |
| + Excise Duty (12%) | Rs.26400 | |
| Total Production Cost | Rs.2,46,400 | Rs.2,20,000 |
| + Value Added Tax (12.5%) | Rs.30,800 | |
| + State GST (6%) | Rs.13,200 | |
| + Central GST (6%) | Rs.13,200 | |
| Manufacturer’s Invoice Value | Rs.2,77,200 | Rs.2,46,400 |
| Value to Wholesaler | ||
| Cost of Products | Rs.2,77,200 | Rs.2,46,400 |
| + Profit Margin (10%) | Rs.27,720 | Rs.24,640 |
| Total Value | Rs.3,04,920 | Rs.2,71,040 |
| + Value Added Tax (12.5%) | Rs,38,115 | |
| + State GST (6%) | Rs.16,262 | |
| + Central GST (6%) | Rs.16,262 | |
| Wholesaler’s Invoice Value | Rs.3,43,035 | Rs.3,03,564 |
| Value to Retailer | ||
| Cost of Products | Rs.3,43,035 | Rs.3,03,564 |
| + Profit Margin (10%) | Rs.34,304 | Rs.30,356 |
| Total Value | Rs.3,77,339 | Rs.3,33,920 |
| + Value Added Tax (12.5%) | Rs.47,167 | |
| + State GST (6%) | Rs.20,035 | |
| + Central GST (6%) | Rs.20,035 | |
| Retailer’s Invoice Value | Rs.4,24,506 | Rs.3,73,990 |
Here is a table showing the calculation of tax for inter-state sales:
| Details | Tax under Previous Regime | Tax under GST |
|---|---|---|
| Value to Retailer | ||
| Cost of Commodities | Rs.2 lakh | Rs.2 lakh |
| + Value Added Tax (12.5%) | Rs.25,000 | |
| + Integrated GST (12%) | Rs.24,000 | |
| + Central State Tax (2%) | Rs.4,000 | |
| Total Value to Retailer | Rs.2,29,000 | Rs.2,24,000 |
As seen from the above example, the cost of commodities sold within a certain state or even between states will reduce the cost for manufacturers, wholesalers as well as retailers.
GST Registration
GST registration is mandatory for any entity that engages in the supply of goods and services within India. The bill for the implementation of GST was approved by the Prime Minister of India, Narendra Modi so that indirect taxes imposed by the central or state governments could be subsumed under one single tax. Here is a simple procedure to complete GST registration from the comfort of your home:
- Log on to www.gst.gov.in.
- The menu atop the page has a tab called ‘Services’, click on it and you will get three options – ‘Registration’, ‘Payments’, and ‘User Services’.
- Click on ‘Registration’ and choose ‘New Registration’ to start with Part A of the registration process.
- A new page will open and here you will be required to select your status as a GST practitioner or a taxpayer.
- A few details will then have to be entered in the form, such as the legal name of the business, the district and state in which the business is located, email address, mobile number, Permanent Account Number, etc.
- The portal will then verify your details and you will receive a One Time Password for confirmation.
- Enter the OTP in the OTP Verification window and click on ‘Proceed’.
- The system will generate a Temporary Reference Number which will be displayed on the screen.
- The Temporary Reference Number will have to be used to login to Part B of the registration process.
- Enter the Temporary Reference Number along with the Captcha Code to start with Part B of the registration process.
- ‘My Saved Application’ will appear on a new page, and you will have to click on the ‘Edit’ icon (white pen in a blue square) under the ‘Action’ option.
- You will be redirected to the registration application form with different tabs, such as Business Details, Authorised Signatory, Promoter/Partners, Authorised Representative, Principal Place of Business, Additional Places of Business, Bank Accounts, Goods and Services, State Specific Information and Verification. You will have to click on each of the aforementioned tabs to enter the required information.
- Next, enter the information related to the commodity before you select ‘Save & Continue’.
- You will then have to fill in information regarding your bank account and then upload the relevant documents.
- You will then be redirected to the verification tab where the details you have sent for verification are displayed. You will be required to put your digital signature on the application after you have filled it up. Digital signatures can be put using EVC, E-Signature, or Digital Signature Certificate. Companies and LLPs can use only Digital Signature Certificates.
- Hit the ‘Submit’ option and the updated details and documents will be saved.
- Hit ‘Proceed’ and you will be redirected to a pop-up window where you will have to click on ‘Sign’.
- Once you have signed the form, you can submit it so that an acknowledgment can be sent to your registered mobile number and email in the form of the Application Reference Number.
- A GST officer will then verify your application number to determine whether it can be approved or rejected. If your application is rejected, you will have to provide some more information or documents until the authorities are convinced to approve your application.
GST Rates in India
Most of the commodities and services that are subject to GST have been categorized under four tax slabs, viz. 5%, 12%, 18%, and 28%. However, GST Rates is not applicable to some goods and services, such as jute, fish, eggs, fresh meat, milk, chicken, curd, fresh fruits, buttermilk, vegetables, natural honey, bread, salt, besan, prasad, sindoor, printed books, bindi, judicial papers, newspapers, handloom, bangles, horn cores, bone meal, bone grist, horn meal, hoof meal, palmyra jaggery, cereal grains hulled, colouring and drawing books, etc.
Here is a list of goods and services under the different tax slabs:
Commodities subject to 5% GST:
- Agarbatti
- Apparels up to Rs.1,000
- Braille paper
- Braille typewriters
- Braille watches
- Cashew nuts
- Coir mats
- Domestic LPG
- Edible oils
- Fertilizers
- First-day covers
- Fish fillet
- Floor covering
- Footwear up to Rs.500
- Frozen vegetables
- Hearing aids
- Insulin
- Matting
- Medicines
- Milk food for babies
- Packaged food items
- Packed paneer
- Pizza bread
- Postage stamps
- Revenue stamps
- Roasted coffee beans
- Rusk
- Sabudana
- Skimmed milk
- Spices
- Stamp-post marks
- Stent
- Sugar
- Tea
Services Subject to 5% GST:
- Transport services such as airways and railways
- Air travel in economy class
- Sale of advertisement space for print media
- Supply of tour operators’ services
- Road transport by radio taxis and motor cabs
- Small restaurants earning turnover up to Rs.50 lakhs
Commodities Subject to 12% GST:
- Almonds
- Animal fat sausage
- Apparel above Rs.1000
- Ayurvedic medicines
- Bhujia
- Butter
- Cake servers
- Carom board
- Chessboard
- Chutney
- Diagnostic kits and reagents
- Exercise books
- Fish knives
- Forks
- Frozen meat products
- Fruit juice
- Fruits
- Ghee
- Glasses for corrective spectacles and flint buttons
- Jelly
- Jam
- Ladles
- Ludo
- Mobile
- Murabba
- Namkeen
- Non-AC restaurants
- Notebooks
- Nuts
- Packaged dry fruits
- Packed coconut water
- Pickle
- Playing cards
- Preparations of vegetables
- Sewing machine
- Skimmers
- Spoons
- State-run lotteries
- Tongs
- Tooth powder
- Umbrella
- Work contracts
Services Subject to 12% GST:
- Air tickets by business class
- Guest houses, inns, and hotels with room tariff ranging between Rs.1000 and Rs.2500 per night
Commodities Subject to 18% GST:
- Aluminium foil Furniture
- Bamboo
- Bidi Patta
- Biscuits
- Branded garments
- Cakes
- Camera
- CCTV
- Circuits
- computers
- Corn flakes
- Curry paste
- Electrical transformer
- Envelopes
- Flavoured refined sugar
- Footwear priced above Rs.500
- Hair oil
- Headgear
- Ice cream
- Instant food mixes
- Kajal pencil sticks
- Mayonnaise
- Mineral water
- Mixed condiments
- Mixed seasonings
- Monitors
- Optical Fiber
- Padding pools
- Swimming pools
- Pasta
- Pastries
- Preserved vegetables
- printed
- Printers
- Salad dressings
- Soap
- Soups
- Speakers
- Steel products
- Tampons
- Tissues
- Toiletries
- Toothpaste
- Weighing machinery (non-electrical or electronic)
Services Subject to 18% GST:
- AC hotels serving alcohol to customers
- Guest houses, inns and hotels with room tariff ranging from Rs.2500 and Rs.5000 per night
- IT services
- Telecom services
Commodities Subject to 28% GST:
- Aerated water
- After shave
- Aircraft for personal use
- Automobiles Motorcycles
- Bidis
- Ceramic tiles
- Chewing gum Molasses
- Chocolates devoid of cocoa
- Deodorants
- Dishwasher
- Dye
- Hair clippers
- Hair shampoo Sunscreen
- Paint
- Pan masala
- Shavers
- Shaving creams
- Vacuum cleaner
- Vending machines
- Waffles and wafers coated with chocolate
- Wallpaper
- Washing machine
- Water heater
- Weighing machine ATM
Services Subject to 28% GST:
- Gambling and race club betting
- Cinema and entertainment
- 5-star hotels
- Guest houses, inns and hotels with room tariff of Rs.5000 and upwards