With the introduction of the GST regime on 1 July 2017, a new era was commenced in the Indian taxation system. Goods and Services Tax (GST full form) replaced the numerous indirect taxes and emerged as a comprehensive, multi-stage, unified tax levied on goods and services nationwide.

Quite naturally, GST calculation became important as it’s imperative to know when and how much GST you are required to pay. You can use a GST calculator online or use the GST calculation formula to get your payable GST amount.

Here we’ll take a look at how to calculate GST using formula and explore some online GST calculator in India for your understanding. Let’s get started.

What is a GST calculator?

Let’s begin by understanding what is a GST calculator?

It is what it says – a ready-to-use calculator where you input relevant GST rates and invoice value to calculate the GST payable by your business for a particular transaction, or for the month or quarter.

Since GST is applicable to manufacturers, service providers, traders, and other business, all GST eligible businesses can use the GST calculator for accurately calculating their payable GST amount.

While you can use a manual calculator for calculating GST amount, it’s recommended to use an online GST calculator that’s prebuilt with the GST rate structure and requires minimal intervention from your side.

Note: Currently, the minimum annual GST registration turnover limit is set to ₹40 lakhs (for goods) and ₹20 lakhs (for services). As such, GST calculation is required for businesses with annual turnover above the turnover threshold.

How is GST calculated?

GST is a destination-based tax system. That means, it is consumed at the place of supply.

The GST system makes it convenient and possible for businesses and taxpayers to know the tax collected at different points for their goods and services.

Before learning about the Indian GST calculation process, there are two things to understand about GST in India:

1. Types of GST in India

In India, there are four different types of GST:

• Integrated GST (IGST): Collected by the central government for inter-state transactions
• Central GST (CGST): Collected by the central government during intra-state transactions
• State GST (SGST): Collected by the state government for intra-state transactions
• Union Territory GST (UTGST): Applicable for Union Territories without legislature e.g., Chandigarh, where the GST is collected by the Union Territory for transactions within the particular UT

2. GST rate slabs

Not all goods and services are taxed the same. Based on the nature of goods and services, the GST rates range between 5% to 28%.

• 5% slab: Edible oil, sugar, tea, coir mats, spices, life saving drugs, road transport service, etc.
• 12% slab: Butter, ghee, mobiles, fruit juice, etc.
• 18% slab: Toiletries, capital goods, ice cream, printers, etc. (Also read: GST on steel bars)
• 28% slab: High end bikes, specific consumer goods, etc.

There are some commodities that attract 0% or NIL taxes, e.g., milk, egg, salt, education services, health services, etc. There are others that attract 3% and 0.25% GST.

GST calculation with example

Based on the information in the previous section, here’s a simple illustration of how GST calculation works:

If a logistics company in Karnataka, provides road transport services to a client in Maharashtra, the applicable GST rate is 5%.

Since this is an inter-state transaction, IGST will be applicable here.

Now, considering the invoice amount is ₹10,000, payable GST amount will be:

GST = (GST %) x (Value of Services) = 5% x 10,000 = ₹500

Total invoice amount = Value of Services + GST = 10,000 + 500 = ₹10,500

This will be collected by the central government, since the transaction is within two different states.

Also read: GST on transport (for more information on the different GST rates for different transportation services)

GST calculator formula

In the above example, we explained how GST is calculated. Here’s the GST formula that you can also use to calculate GST amount at any given time.

GST formula = (GST rate %) x (Value of goods/services)

We’ll take the example of logistics services, but this time with courier services where GST is charged at 18%. We will also change the place of supply to Karnataka, i.e., intra-state transaction. This means that here CGST and SGST will be charged instead of IGST.

GST calculator for inter-state transactions:

CGST calculator formula = (GST rate % / 2) x (Value of Services) = (18% /2) x 10,000 = 9% x 10,000 = ₹900

SGST calculator formula = (GST rate % / 2) x (Value of Services) = (18% /2) x 10,000 = 9% x 10,000 = ₹900

Total GST payable = CGST + SGST = ₹900 + ₹900 = ₹1,800

Total invoice amount = Original invoice amount + Total GST = ₹10,000 + ₹1,800 = ₹11,800

As such, of the total ₹1,800 collected as GST, ₹900 will be collected by the state of Karnataka and ₹900 will be collected by the central government.

Note: When calculating UTGST, the same method of GST calculation can be used.

Also read: Difference between courier and logistics services

Inclusive and Exclusive GST amount calculation in India

When doing GST calculation in India, two commonly used terms are:

• GST Inclusive amount: This is the value of the goods/services after adding GST to the original amount. This is included in the pricing and not charged separately.
• GST Exclusive amount: This is the value of the goods/services after the GST on the total amount (inclusive) is deducted or removed.
• GST Exclusive amount calculation formula: This is also known as GST removal and is used to remove the GST amount payable from the GST-inclusive price to know the original value of the product.

Original price = Net price – {100/(100+GST%)}

How to use online GST Calculator in India

When you want to calculate GST amount in India, it is recommended to use an online GST Calculator India. These calculators are pre-built with the formula for GST calculations and require minimum manual interventions.

In certain cases, the algorithm is designed such that it will recognise and assign the GST rate % based on the goods/services selected.

You can follow the generic steps below for knowing your GST payable amount using a reliable Indian GST Calculator:

• Select whether you are calculating for GST Inclusive or GST Exclusive
• Enter the original invoice amount and the GST rate (or goods/services as the case may be)
• Click on Calculate (or similar CTA) to get the results

Running your own business is a tedious, challenging, and difficult task. And the online GST calculator can help you free your time and effort from doing complex calculations.

To ensure that your business is compliant and GST and has paid all taxes as per requirements, it’s helpful if you use an India GST calculator for calculating the required GST payable amount.

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Author: Sohini Banerjee

Sohini is a seasoned content writer with 12 years’ experience in developing marketing and business content across multiple formats. At Tata nexarc, she leverages her skills in crafting curated content on the Indian MSME sector, steel procurement, and logistics. In her personal time, she enjoys reading fiction and being up-to-date on trends in digital marketing and the Indian business ecosystem.