GST rules for wholesalers & retailers
In the current indirect tax regime, retailers and wholesalers could evade taxes as there is no mechanism by which actual transactions can be tracked. Hence, most transactions are done in black, where no invoice is issued to the buyer, and no entry is posted for such sales in their books.
With the new GST rules on the wholesale and retail industry, every invoice with taxable supply has to be uploaded on the GSTN portal. It needs to be accepted by the buyer, retailers and wholesalers, thereby reducing tax evasion. Documents required for GST registration are crucial to ensuring compliance for businesses in this sector.
GST calculation formula
Businesses, wholesalers and retailers can calculate their GST liability easily by using the below GST formula. Alternatively, with the help of a GST calculator, computation becomes even more manageable and quicker.
- Where GST is excluded:
GST amount = (value of supply * GST%)/100
Price to be charged = value of supply + GST amount - Where GST is included in the value of supply:
GST amount = value of supply – [value of supply x {100/(100+GST%)}]
Additionally, wholesalers should consider understanding the GST state code list for accurate tax categorisation based on the buyer’s state.
How to calculate GST for wholesalers & retailers
“Manufacturers and wholesalers can calculate the GST applicable on goods and services along with the final or the gross price. Below is an illustration comparing the GST liability before and after GST is levied. This shows how the GST liability, and thus the end price is borne by the consumer, has been reduced. For more insights, you can explore GST on cars to understand how GST impacts automobile pricing.
Particulars |
Rate (%) |
Amount pre-GST |
Amount under GST |
Cost of the product |
– |
2,78,438 |
2,46,400 |
Profit |
10% |
27,844 |
24,640 |
Total |
– |
3,06,282 |
2,71,040 |
VAT (Rs. 306282 x 12.5%) – (credit on VAT paid above Rs. 30,938) |
12.50% |
7,347 |
Nil |
CGST (Rs. 271040 x 6%) – (credit on CGST paid above Rs. 13,200) |
6% |
Nil |
3,062 |
SGST (Rs. 271040 x 6%) – (credit on SGST paid above Rs. 13,200) |
6% |
Nil |
3,062 |
Final invoice to the end-consumer |
– |
3,13,629 |
2,77,164 |
