Businesses, manufacturers, wholesalers and retailers can easily calculate GST using this formula:
Simple GST calculation
• 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
Here’s an example to illustrate this:
Rate (%)
Amount
Original cost of goods
Rs.1,00,000
GST
18%
Rs.18,000
Cost of goods sold
Rs.1,18,000
GST calculation for manufacturers:
Rate (%)
Pre- GST
Post- GST
Cost of product
10000
10000
Excise duty
12%
1200
Nil
Profit
10%
1000
1000
TOTAL
12200
11000
VAT
12.50%
1525
Nil
CGST
6%
Nil
660
SGST
6%
Nil
660
Final invoice to the wholesaler
13725
12320
At a cost point of Rs.10,000, the manufacturer is saving Rs.1405 i.e. a 14% tax saving on the cost. This brings a cost reduction for manufacturers, the benefit of which is ultimately passed on to the wholesalers, retailers and consumers.
GST calculation for wholesalers and retailers:
Rate (%)
Pre- GST
Post- GST
Cost of product
13725
12320
Profit
10%
1373
1232
TOTAL
15098
13552
VAT
12.50%
1887
Nil
CGST
6%
Nil
813
SGST
6%
Nil
813
Final invoice to the consumer
16985
15178
GST brings down the cost of the product and thus, the consumer pays a lesser price for the goods at the same profit% earned by wholesalers and retailers.
What is GST?
Goods and Service Tax (GST) is an indirect tax that manufacturers, wholesalers, retailers and consumers have to pay on consumer goods and services. It is a destination-based and multi-stage tax which is charged on every value addition. Passed in the Indian Parliament on 29th March 2017, the act came into effect from July 1, 2017. Replacing all indirect taxes like central excise duty, service tax, customs duty, VAT, Octroi and surcharges, the implementation of GST has simplified the taxation processes for businesses.
What are the benefits of using a GST calculator?
The online GST calculator help you to find out either gross or net product price on percentage-based GST rates. It saves time and reduces chances of human error while computing the total cost of goods and services.