GST or Goods & Services Tax is a tax that was introduced by the Government of India after 2016 which basically combined all the taxes such as VAT, excise duty, sales tax, etc., into one single taxation system.
It is one of the major reforms in taxation which help the India Economy and businesses in doing business. Currently, GST has a lot of products and services included in its list and the government has planned to increase the production base for wider application of GST in the country.
In GST, all the parties involved in the transaction i.e., sales or purchase of the Goods or Services pay GST and at the time of computation of the GST could claim GST returns as a refund.
Now, the major question that might arise is how to calculate GST. in this article, we will discuss has to calculate GST, the types of GST, etc.
Types of GST
Goods and Services Tax or GST is a tax implied on the goods and services sold in India. The tax charged by the Government is distributed among the state and the center depending on where the item has been manufactured. The central government’s cut and the state government cut from the taxes are the bases on which GST is divided.
The following are the types of GST that are collected under the GST act-
- SGST
- CGST
- IGST
- UTGST
SGST
SGST stands for State Goods and Services Tax which is a tax amount that is collected by the State Governments as their revenue.
CGST
CGST stands for Central Goods and Services tax which is collected by the Central Government.
IGST
CGST stands for Integrated Goods and Services tax which is collected by the Central Government for inter-state transactions and imports.
UTGST
UTGST stands for Union Territory Goods and Services tax which is collected by the Government in the Union Territory of India.
How is GST Calculated?
Whenever someone pays GST, the tax will be divided into two halves, one half goes to the Central Government and the other half goes to the State or Union Territory Government.
In case there had been importing or transfer of goods within the states then, in that case, IGST will be levied instead of SGST or UTGST.
For Example- let’s say you bought a pen in Delhi for Rs.10/- then the application GST on it will be 12%. So, the total amount of GST taxed on you will be Rs.1.2/-.
Out of Rs.1.2/-, Rs.0.6 will be for the Central Government, and the other half i.e., Rs.0.6/- will be for the Delhi Government.
GST Calculation Formula
The formula to calculate GST is as follows-
Add GST
GST Amount = (Original Cost x GST%)/100
Net Price = Original Cost + GST Amount
Remove GST:
GST Amount = Original Cost – [Original Cost x {100/(100+GST%)}]
Net Price = Original Cost – GST Amount.
GST Rates in India
The following are the GST rates on some of the items that you can purchase in India-
| Category | New GST Rates |
| Railways Goods and Parts under Chapter 86 | 18% |
| Pens | 18% |
| Metal Concentrates and Ores | 18% |
| Certain Renewable Energy Devices | 12% |
| Recorded media reproduction and print | 18% |
| Broadcasting, sound recordings, and licensing | 18% |
| Printed material | 18% |
| Packing containers and boxes | 18% |
| Scrap and polyurethanes | 18% |
| If vehicles are equipped with retrofitting kits for disabled people, | 5% |
| Keytruda for cancer | 5% |
| IGST is levied on goods sold at the Indo-Bangladesh border | NIL |
| Sugar | 5% |
| Tea | 5% |
| Packed Paneer | 5% |
| Coal | 5% |
| Edible Oils | 5% |
| Raisin | 5% |
| Domestic LPG | 5% |
| Roasted Coffee Beans | 5% |
| PDS Kerosene | 5% |
| Skimmed Milk Powder | 5% |
| Cashew Nuts | 5% |
| Footwear (< Rs.500) | 5% |
| Milk Food for Babies | 5% |
| Apparel (< Rs.1000) | 5% |
| Fabric | 5% |
| Coir Mats, Matting & Floor Covering | 5% |
| Spices | 5% |
| Agarbatti | 5% |
| Coal | 5% |
| Mishti/Mithai (Indian Sweets) | 5% |
| Life-saving drugs | 5% |
| Coffee (except instant) | 5% |
| Butter | 12% |
| Ghee | 12% |
| Computers | 12% |
| Processed food | 12% |
| Almonds | 12% |
| Mobiles | 12% |
| Fruit Juice | 12% |
| Preparations of Vegetables, Nuts Fruits, or other parts | 12% |
| Packed Coconut Water | 12% |
| Umbrella | 12% |
| Hair Oil | 18% |
| Capital goods | 18% |
| Toothpaste | 18% |
| Industrial Intermediaries | 18% |
| Soap | 18% |
| Ice-cream | 18% |
| Pasta | 18% |
| Toiletries | 18% |
| Corn Flakes | 18% |
| Soups | 18% |
| Computers | 18% |
| Printers | 18% |
| Small cars (+1% or 3% cess) | 28% |
| High-end motorcycles (+15% cess) | 28% |
| Consumer durables such as AC and fridge | 28% |
| Beedis are NOT included here | 28% |
| Luxury & sin items like BMWs, cigarettes | 28% |
| and aerated drinks (+15% cess) | 28% |
