Implemented on 1 July 2017, GST (Goods and services tax) is considered the largest tax reform of the country. Also called the union tax, the reform brought about the unison of tax collection for goods and services in India and helped do away with the double-taxation system.
The GST is mainly applicable for self-employees and businesses (small and large) across the country. Based on the product being sold, the buyer is charged a GST on the product, depending on which tax slab it falls under and the buyer sells the product with the applicable GST to the seller. However, the buyer of the product can claim GST and get back the money he/she or the organisation paid as tax, through the GST refund facility.
That said, for those running a business, calculating the GST that they are about to file for a refund could be a complicated process, which brings us to the reason why a GST calculator is important. The GST calculator takes into consideration all the entries made and electronically calculates how much GST he/she can file. In short, using a GST calculator makes the whole process seamless, and removes the factor of human error in making calculations.
Reasons why you need to use a GST calculator
Listed below are the key reasons why a GST calculator is necessary:
- The GST taxpayer who is filing for a GST refund needs to take into consideration the sales (intra-state and interstate), the reverse charge of the sale, supplies that are exempted from GST and the non-eligible ITC (Input Tax Credit).
- If the taxpayer makes a miscalculation when calculating the GST, the taxpayer has to pay a penalty of 18% on the shortfall.
- The calculation is further complicated as the taxpayer has to consider the outward and inward supplies, the opening balance of the electronic cash ledger and the electronic credit ledger for the month he/she is filing taxes.
- Using the calculator, the taxpayer has to also calculate the GST refund he/she is liable for the month.
Factors that are taken into consideration when calculating the GST
Listed below are the key factors that are taken into consideration when calculating the GST:
- The due date of filing the GST return for the month.
- The exact date of filing the GST return for the month.
- The month for which the calculations are made.
- The tax liability for the month.
- The purchases of the month that result in the reverse charge.
- Input Tax Credit.
- Opening balance of the electronic credit ledger.
- Opening balance of the cash ledger.
5 Steps to calculate and file GST
Listed below are the key steps one has to take to calculate and file their GST:
Step 1: Ensure you know the exact tax slab the product you are filing GST for falls under. If the business revolves around selling of goods, you should know the HSN (Harmonized system of Nomenclature). If the business revolves around services, you should be aware of the SAC (Services Accounting Code). Under each code there are 5 tax slabs – 0%, 5%, 12%, 18% and the highest 28%.
Step 2: Ensure you know the origin of the supply of goods and where it is supplied from as it should be categorized either under CGST (Central GST) and SGST (State GST) and the IGST (Integrated GST).
Step 3: Next, the supplier of the good or the services have to collect GST from the buyer or the recipient. The collected tax is then remitted to the Government – either the state or the central government.
Step 4: As per the GST rules, every supplier has to file their GST thrice a month, however, if the turnover of the business is less than Rs.75 lakh, then the business can be enrolled under the GST Composition Scheme and can pay a one-time GST on the turnover for the month.
Steps 5: The last step is to know the type of business model, whether to is B2B (Business to Business) or B2C (Business to Customer). The taxpayer has to also ensure whether the supply is more or less than Rs.2.5 lakh.
GST taxpayers who are new to the concept of filing their taxes should make use of the GST electronic calculators. One can now get physical calculators to do the job or could calculate their returns on various online portals that have the GST calculator. A website like bankbazaar.com provides a guide on how to calculator GST tax with formula.