The GST, or Goods and Services Tax, is an indirect tax imposed on the provision of goods and services. GST became India’s unified taxation system on July 1, 2017, and it replaced all indirect taxes in the country. During the 2017 Budget Session, the Central Government passed the GST Act, which Parliament adopted on March 29, 2017. Central Excise Duty, VAT, Entry Tax, and Octroi were among the indirect taxes eliminated.
GST is a national sale and uses tax levied to manufacture, sell, and consume goods and services. To register under the GST policy, different small and large businesses must have a GST Identification Number.
When a sale is conducted between states (inter-state), the Integrated GST rate is applied. In addition, both the central and state governments levy GST on intra-state sales.
Table of Contents
Who should go for GST registration?
The GST Act specifies the individuals who are obliged to register for GST. All of these individuals must collect GST from their consumers and remit it to the government.
A person can also do GST registration voluntarily, and after doing so, he is compelled to collect GST. He is subject to all of the terms of the GST Act.
The different types of taxpayers under the gst regime
Under GST, there are two sorts of taxpayers.
Type 1: Taxpayers enrolled in the regular scheme
Taxpayers can claim the Input tax credit and collect the tax via tax invoices under this taxation structure. It includes companies or taxpayers that meet a certain turnover level.
- A company with a revenue of up to 5 crore rupees.
- A company with a revenue of $5 million or higher.
Type – 2: Registered taxpayer according to the composition scheme
Taxpayers cannot claim the input tax credit or collect tax through tax invoices under this taxing structure. The goal is to raise the tax culture to a level where it can be used.
For a better experience, the country is gradually adapting portal services and online form procedures. The government is working to expedite the GST registration to encourage citizens to pay their taxes for the betterment of the country.
What are the various GST tax heads?
Central Goods and Services Tax (CGST), State Goods and Services Tax (SGST), Union Territory Goods and Services Tax (UTGST), and Integrated Goods and Services Tax (IGST) are the four types of GST (IGST).
IGST is levied on interstate supplies where the point of supply is located in a different state than the point of sale.
For intrastate supplies where the supply side is within the state, an equal rate of CGST and SGST (roughly half the GST rate applicable for IGST) is applied.
How to calculate GST?
Multiply the Taxable amount by the GST rate to compute GST. If CGST and SGST/UTGST are used, the CGST and SGST amounts are equal to half of the GST payment.
GST equals the taxable amount multiplied by the GST rate. If you have an amount that already includes GST, you can use the formula below to compute the GST-free value.
GST excluding amount = GST including amount/(1+ GST rate/100) GST excluding amount.
Taxpayers may now see the tax levied at multiple stages for various goods and services under the GST regime thanks to the unified taxation system. The taxpayer should be aware of the GST rates that apply to various categories to calculate GST. GST is divided into four slabs: 5%, 12%, 18%, and 28%.
A simple demonstration can be used to explain GST calculation:
If a good or service costs Rs. 2,000 and the GST rate is 12%, the net price will be = 2,000+ (2,000X(12/100)) = 2,000+240 = Rs. 2,240.
Requirements for GST calculation
India now has a unified national tax structure that applies to all states. Many businesspeople were concerned about it since it could increase the compliance burden. On the other hand, GST levies on everyday food and personal care products provide a better deal.
There are a few things you’ll need to figure out how to compute GST tax.
- The date on which the GST yearly return was first filed.
- The RCM is drawn to your business because of the product/services you provide (reverse charge mechanism).
- The recognition of ITC (Input Tax Credit).
- The taxable month’s total tax amount.
- The last day of the month in which you must file your GST returns.
- The number of months for calculation.
What does the GST inclusive amount mean?
After including the GST amount in the original value, the total worth of a product is known as the GST included amount. The customer is not charged individually for the tax.
What does “GST exclusive” mean?
After removing the GST amount from the GST Inclusive value, the value of a product is known as the GST Exclusive amount.
Is GST a requirement for an MSME loan?
Yes, for existing MSME owners as well as salaried professionals who want to start an MSME business, the previous year’s GST return is required for GST registration.
If you wish to start an MSME business, you won’t be able to fund your MSME organization on your own. You may have to borrow money through business loan plans. You can rely on ZipLoan for business financing in these scenarios. It is the safest and most practical method of obtaining an MSME loan.
GST amount as per the Government calculation
A registered person must pay the difference between GST on sales and GST on purchases made in a month. Items, services, or capital goods can all be purchased.
Capital goods are items you didn’t buy to resell. For instance, furniture for your store, a production machine, and so on.
Calculating the GST tax is a simple procedure. However, as a taxpayer, be conscious of the procedures you use to calculate your taxes. As Indian citizens, we must pay our taxes on time and in the most transparent manner possible. It’s the only way we can help the country and get out of the economic crisis.
Frequently Asked Questions
All the businesses supplying goods whose turnover exceeds Rs 40 lakh in a financial year are required to register as a normal taxable person.
The formula for GST calculation:
1) Add GST: GST Amount = (Original Cost x GST%)/100. Net Price = Original Cost + GST Amount.
2) Remove GST: GST Amount = Original Cost – [Original Cost x {100/(100+GST%)}] Net Price = Original Cost – GST Amount.
GST can be calculated simply by multiplying the Taxable amount by GST rate. If CGST & SGST/UTGST is to be applied then CGST and SGST both amounts are half of the total GST amount. For example: GST including amount is Rs. 525 and GST rate is 5%.
The 4 types of GST in India are:
1- SGST (State Goods and Services Tax)
2- CGST (Central Goods and Services Tax)
3- IGST (Integrated Goods and Services Tax)
4- UGST (Union Territory Goods and Services Tax)
The full form of GST is Goods and Services Tax.
You May Also Like:
