What is GST?

The term GST is commonly known as, Goods and services tax. The GST act was passed by the parliament on 29th March 2017, and it was implemented on 1st July 2017.

GST is an indirect tax which is levied on the value addition on every transaction. Before GST established there are multiple tax that was applied and paid by the citizens of India, some of them are Excise duty, Entertainment tax, VAT (value added tax).
GST has been divided into 3 parts, CGST (Central goods and services tax), SGST (State goods and services tax), and last one is IGST (Integrated goods and services tax). For selling goods or services within the state CGST & SGST is applied and for making sales in another state, IGST has been charged.
GST has different tax slabs for various types of product or services, the rates are 0%, 5%, 12%, 18%, 28%. The goods that are necessary for the daily needs of a person are charged at lower tax rates, and the luxury items or products are charged at high rates i.e. 28%.

Download Shoppeez, the easy billing software that lets you quickly list unlimited products and apply GST effortlessly with our built-in GST calculator for India.

Benefits of GST?

The advantage of implementing GST in billing software is,

Lower Tax Burden

GST helps individuals save money by applying tax only to the value added at each stage of production, instead of taxing the total cost, which includes previous taxes. This approach reduces the overall cost of goods and services.

Relief in Threshold limit

Businesses with a yearly turnover of less than ₹40 lakh for goods and ₹20 lakh for services, and for special category states, those with a turnover of ₹20 lakh for goods and ₹10 lakh for services, are exempt from filing under GST.

Composition Scheme Benefit

Taxpayers can avail benefit from composition scheme with zero long procedure and formalities. Businesses with a turnover of less than 1.5 crore and for small businesses 75 lakh can register themselves under this scheme. The manufacturers and traders of goods can pay only 1% tax on their overall turnover.

Simple Procedure

GST is a less complicated process as businesses only have to register themselves under GST directly from anywhere. With a government registered online portal they can apply for tax returns and manage their tax obligations more easily from anywhere.

Less Compliance

GST simplifies management by combining multiple taxes into a single tax system. Additionally, it allows businesses to file returns quarterly instead of monthly, saving taxpayers a lot of time. By making everything possible online, GST reduces paperwork and streamlines the compliance process.

More Transparency

By keeping digital records GST ensures that all records and transactions are made free from manipulation by keeping proper record of invoices of buyers it enhances the clarity and fairness among the taxpayers as well as the business by giving GST rates publicly. This fosters a strong positive tax environment.

GST Tax Slabs in India?

In India GST has total 4 tax rates, 5%, 12%, 18%, and 28%.

GST Slab Rate 0%

Goods - Milk, Kajal, Eggs, Educational Services, Curd, Lassi, Health Services, Children’s Drawing & Colouring Books, Unpacked Foodgrains, Unbranded Atta/Maida, Unpacked Paneer, Gur, Besan, Unbranded Natural Honey, Fresh Vegetables, Salt, Prasad, Jaggery, Broom, etc. Services – Agricultural services, Government services, Transportation services, Judicial services, Educational services, Medical services, Organizational services, and other services.

GST Slab Rate 5%

Goods - The slab 5% includes variety of items such as, Processed foods, Tea, Coffee, Spices, Soft drinks, PDS Kerosene, Footwear under ₹500, Apparels under ₹1000, Branded dry fruits, Coal, Sweets, Aerated waters, Hand tools, Unbranded fabrics, Fish, Meat, Agarbatti (incense sticks) etc. Services – Domestic Flights, Domestic Tours & Travel package, Non AC Restaurants, Newspaper Printing, Passenger transport by train, etc.

GST Slab Rate 12%

Goods - Butter, Ghee, Processed food, Almonds, Fruit Juice, Packed Coconut water, Umbrella, Stationary items, handbags, Purses, Jewellery Box, some Skincare products, etc. Services – Movie Tickets upto ₹100, Catering services, Construction services, etc.

GST Slab Rate 18%

Goods - Hair oil, Capital goods, Toothpaste, Industrial Intermediaries, Soap, Ice-cream, Pasta, Toiletries, Hair Shampoo, Corn Flakes, Soup, Printers, Computers, Water Heater, Watches, Perfume, Deodorants, Shaving, Briefcase, Furniture, Camera, Binocular, Cutlery, Branded leather clothing, Detergent, Television, Mobile Phones, etc. Services – Hotels with a bill below ₹7500 per night, AC Restaurants (Takeaway or deliveries), Telecommunication services, Diagnostic services, financial services, Movie tickets above ₹100, International Flights, etc.

GST Slab Rate 28%

Goods - Luxury goods, high-end cars, motorbikes, tobacco products, aerated drinks, certain types of cosmetics, gambling and betting services, pan masala, and some plastic products, etc. Services – Gambling and Batting services, Concerts (if ticket price exceed ₹1000), Luxury 5-star hotels with a room rent of per day exceed ₹7500, Luxury or premium food items, etc.

Impact of GST on India

India's adoption of the Goods and Services Tax (GST) has been a transformative milestone in its tax system, it has significantly reshaped the business landscape. This shift from the previous tax structure to the new GST framework has streamlined operations, fostering an environment for economic growth. Earlier we were burdened with multiple complex indirect taxes, but today businesses now benefit from a simplified model with just three main tax rates. This change not only enhances efficiency and compliance but also encourages entrepreneurship throughout the country, promising a future of sustainable advancement.

Let’s understand both with a practical example,

Suppose, A retailer of Madhya Pradesh sold a television of ₹50,000. VAT (M.P) - 14% Service Cost – 2000/- Service Tax – 15%

GST calculated under Old Regime	GST calculated under New Regime
+ VAT@14% (₹7,000)	GST = 18%
VAT (M.P) - 14%	CGST @9% - ₹4,500
Service Cost – ₹2000/-	SGST @9% - ₹4,500
+ Service Cost (₹2000)
Final product price = (₹59,300)	Final Product price = ₹59,000

Formula to Calculate GST in India

Formula to calculate GST in India

GST Amount = (Original Cost * GST%) / 100

Net Price = Original Cost + GST Amount

For Example,

Original cost = 500, GST% = 18

(500 * 18/100) = 90 GST amount

( 500 + 90 ) = 590 Net price

Formula to Calculate GST from base amount

GST Amount = Original Cost – (Original Cost * (100 / (100 + GST%) ) )

Net Price = Original Cost – GST Amount

For Example,

Original cost = 500, GST% = 18

500 - (500 *(100/ (100+18))) = 76.25 GST amount

500 - 76.25 = 423.75 (Net price)

Difference Between GST under New Regime & GST under Old Regime

Basic	GST New Regime	GST Old Regime
Tax Structure	It is a centralized tax system that combines multiple indirect taxes into a single tax, simplifying compliance and making the tax process more efficient.	Multiple indirect taxes were levied at various levels, resulting in a complex and cumbersome process.
Tax Rates	In the new GST regime, there are fewer tax slabs which are set at, 5%, 8%, 12%,18%, 28%.	There are several taxes such as VAT, excise duty, service tax, sales tax, luxury tax and many more at high rates.
Input Tax Credit	ITC is easily claimed on both input services and capital goods.	ITC was restricted to many indirect taxes, because different states have different rules for claiming ITC.
Compliance	The new tax regime is based on a unified online portal for GST to make the process faster with less paperwork.	In the old tax regime, businesses were required to maintain extensive documentation for claiming Input Tax Credit (ITC), which often led to frustration due to the complex structure of compliance.
Exemptions and Deductions	With the introduction of the new GST rules, a systematic list of exempted items and deductions has been established, helping businesses take better advantage of these benefits.	Exemptions and deductions in the old tax regime are fragmented by state and based on specific goods or services, creating limitations for businesses in availing these benefits.
Cascading Effect	The new regime eliminates the cascading effect, enabling businesses to easily claim Input Tax Credits and reducing the overall tax burden.	Due to the cascading effect, there is a higher burden on the taxpayers.
Filing of Return	It offers a unified approach to filing returns, consolidating multiple transactions to enhance transparency and facilitate compliance with tax obligations.	In old regime, filing multiple returns required careful preparation, and any delays could result in significant penalties and potential compliance issues.
Threshold Limit	In the new tax regime, businesses typically need to register for GST if their turnover exceeds ₹20 lakh. However, for special category states, this threshold is lower at ₹10 lakh.	The threshold limits may vary by state, typically ranging from ₹5 lakh to ₹10 lakh for VAT, while service providers generally have a threshold limit of ₹10 lakh.

What is an online GST Calculator?

An online GST calculator is a valuable tool for businesses, auditors, buyers, and sellers to accurately collect and pay taxes. It performs all calculations in seconds, minimizing the risk of errors. This easy-to-use calculator helps you meet your Goods and Services Tax obligations effortlessly. You can easily select the applicable GST rates (5%, 12%, 18%, and 28%) for your products or services to determine your profit margin.

How to Calculate GST using a GST Calculator?

You might be wondering how to use an online GST calculator. It’s as simple as clicking a button! Just follow these steps:

Step-1 Select whether you’re a buyer, manufacturer, wholesaler, or retailer.
Step-2 Enter the amount you paid for the product and choose the applicable rate of GST.
Step-3 Click on Calculate & it’s done.

Advantages of GST Calculator

Having an online GST calculator is incredibly beneficial for any business. In the past, when technology was less advanced, individuals had to manually calculate GST on products. Fortunately, with today’s technological advancements, we now have free access to easy GST calculators that allow for quick tax calculations with minimal effort. Not only does the calculator provide accuracy and rapid results, but it also aids in making informed financial decisions. For every business, understanding profit margins after accounting for taxes is crucial. With the help of this GST calculator, you can easily determine your profit margin and prepare your budgets effectively.

OUR INDUSTRIES

Online GST calculator India

Buyer

GST:

Gross Price

CGST Amount

SGST Amount

Total Tax

Manufacturer

GST:

Production Cost

Profit Amount

Total Tax

Selling Price

Wholesaler/Retailer

GST:

Purchase Price

Purchase Price

Total Tax

Selling Price

What is GST?

Benefits of GST?

Lower Tax Burden

Relief in Threshold limit

Composition Scheme Benefit

Simple Procedure

Less Compliance

More Transparency

GST Tax Slabs in India?

GST Slab Rate 0%

GST Slab Rate 5%

GST Slab Rate 12%

GST Slab Rate 18%

GST Slab Rate 28%

Impact of GST on India

Formula to Calculate GST in India

Difference Between GST under New Regime & GST under Old Regime

What is an online GST Calculator?

How to Calculate GST using a GST Calculator?

Advantages of GST Calculator

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