GST Calculator

GST (Goods and Services Tax) is a comprehensive indirect tax on manufacture, sale, and consumption of goods and services throughout India. Implemented on July 1, 2017, GST replaced multiple indirect taxes like VAT, service tax, excise duty, purchase tax, entertainment tax, and luxury tax. How it works: GST is a destination-based tax collected at each stage of the supply chain. For example, when a manufacturer sells to wholesaler, GST is charged; wholesaler sells to retailer with GST; retailer sells to consumer with GST. At each stage, the seller can claim Input Tax Credit (ITC) for GST paid on purchases, so they only pay tax on the value addition. This eliminates the "tax on tax" cascade effect. The GST structure has three components: CGST (Central GST) collected by central government, SGST (State GST) collected by state government, and IGST (Integrated GST) for interstate transactions. The constitutional amendment allows both center and states to levy GST, with revenue sharing mechanisms ensuring fiscal federalism. GST has simplified tax structure (from 17+ taxes to one), increased tax base (wider coverage), reduced compliance burden (unified returns), and created a common national market without state border barriers.

Use GST Exclusive mode when: (1) You're a manufacturer/wholesaler/service provider creating invoices where you quote base price and add GST on top. Example: Your product costs ₹1,000; you charge ₹1,000 + 18% GST = ₹1,180 final price. (2) B2B transactions where buyers claim ITC—they want clear separation of base value and tax. (3) Preparing quotations where you want to show price before and after GST clearly. (4) Your accounting system records product price and GST separately. Use GST Inclusive mode when: (1) You have MRP (Maximum Retail Price) printed on product which includes all taxes, and you need to extract GST component. Example: MRP is ₹1,180; you need to know base price (₹1,000) and GST amount (₹180) for accounting. (2) Reverse calculating for financial analysis—if you know final selling price and want to determine how much went to tax vs. actual revenue. (3) Preparing cost sheets where final price is fixed (competitive market) and you're working backward to find margins after accounting for GST. (4) Verifying retail invoices/bills where total is given and you want to check if GST calculation is correct. Most B2B businesses use exclusive mode; most B2C retail uses inclusive mode for consumer-facing prices.

GST rate determination involves: (1) HSN Code (Harmonized System of Nomenclature) for goods: A 6-8 digit code that classifies products globally. Search your product on CBIC website or GST portal to find HSN code and corresponding GST rate. For example, mobile phones are HSN 8517, rate 12%; rice is HSN 1006, mostly 5%; cars are HSN 8703, rate 28%. (2) SAC Code (Services Accounting Code) for services: A 6-digit code for services. For example, restaurant services are SAC 996331, rates vary (5% without AC, 18% with AC, 5% for standalone takeaway); legal services are SAC 998212, rate 18%; transport services vary (5-18% based on mode). (3) Check GST Rate Schedule: The government publishes detailed rate schedules with commodity/service descriptions. Rates are periodically revised by GST Council—always check latest notifications. (4) Exemptions and Concessions: Some items are exempt (0% GST)—fresh vegetables, milk, educational services, healthcare. Some have conditional rates (restaurant GST depends on annual turnover, AC/non-AC, type). (5) When in Doubt: Consult with a CA or GST practitioner. Wrong rate application attracts 18% interest on short-paid tax, penalties, and can invite GST audit. Maintain documentation justifying rate applied (GST Council notification, HSN/SAC classification, expert opinion).

Input Tax Credit (ITC) is the cornerstone of GST, allowing businesses to reduce their tax liability by claiming credit for GST paid on business purchases. How it works: If you paid ₹10,000 CGST + ₹10,000 SGST (total ₹20,000 GST) on raw materials, and collected ₹30,000 CGST + ₹30,000 SGST (total ₹60,000 GST) on sales, you only pay ₹20,000 CGST + ₹20,000 SGST to the government (net ₹40,000). The ₹20,000 paid on purchases is your ITC. Eligibility conditions: (1) You must be registered under GST. (2) You must possess a valid tax invoice or debit note. (3) Goods/services purchased must be for business use (not personal consumption). (4) You must have received the goods/services. (5) Supplier must have filed their GSTR-1 (outward supply return). (6) You must file GSTR-3B timely. ITC matching: Your GSTR-2B (auto-populated from supplier's GSTR-1) shows ITC available. Claim only matched ITC to avoid notices. Restrictions: No ITC on motor vehicles (except for specified business uses), goods for personal consumption, construction of immovable property (except plant and machinery), membership of clubs, life/health insurance. Time limit: Claim ITC by earlier of: (a) September of following financial year, or (b) date of filing annual return. Document carefully, reconcile monthly, and maintain proper books—ITC is a major cost saver but highly scrutinized by GST authorities.

GST registration is mandatory if: (1) Annual aggregate turnover exceeds ₹40 lakhs (₹20 lakhs for special category states) for goods suppliers; ₹20 lakhs (₹10 lakhs for special category states) for service providers. Turnover includes all India supplies. (2) Interstate supplies: Even ₹1 rupee of interstate B2B supply mandates registration (no threshold exemption). (3) Casual taxable person or non-resident taxable person. (4) E-commerce operators and sellers through e-commerce platforms. (5) Input service distributors, TDS/TCS deductors under GST. (6) Reverse charge mechanism applicants. Voluntary registration: Even if below threshold, you can register voluntarily to claim ITC, appear more credible to B2B clients, enable interstate sales. Compliance requirements post-registration: (1) Monthly GSTR-1 (outward supplies) by 11th of next month. (2) Monthly GSTR-3B (summary return and tax payment) by 20th of next month. Some taxpayers file quarterly under QRMP scheme. (3) Annual Return GSTR-9 by December 31 of next financial year. (4) Reconciliation Statement GSTR-9C (if turnover >₹5 crore) by December 31. (5) E-way bills for goods movement above ₹50,000. (6) E-invoicing mandatory for turnover >₹5 crore. (7) TDS/TCS compliance if applicable. Non-compliance penalties: Late fees ₹50/day (₹20 for nil return), interest 18% p.a. on delayed tax payment, cancellation of registration for persistent non-filing. Compliance is tedious but essential—consider hiring a CA or using GST software.

These are components of GST applicable to different transaction types: (1) CGST (Central GST): Collected by Central Government on intrastate supplies (within same state). For 18% GST, 9% is CGST. Goes to central government consolidated fund. Central government can use CGST for ITC set-off. (2) SGST (State GST): Collected by State Government on intrastate supplies. For 18% GST, 9% is SGST. Goes to respective state government's consolidated fund. State government can use SGST for ITC set-off. (3) IGST (Integrated GST): Collected by Central Government on: interstate supplies (between different states), imports, exports (zero-rated). For 18% GST, full 18% is IGST. Initially goes to central government, then distributed to destination state through settlement mechanism. Both CGST and SGST can be used to set off IGST liability. (4) UTGST (Union Territory GST): Applicable in Union Territories without legislature (Andaman & Nicobar, Lakshadweep, Dadra & Nagar Haveli, Daman & Diu, Ladakh). Works like SGST but goes to UT administration. ITC Set-off Order: Important rule for tax payment: (1) IGST must be paid first from IGST credit, then can use CGST/SGST credit. (2) CGST can be paid from CGST credit only (SGST credit cannot be used for CGST). (3) SGST can be paid from SGST credit only (CGST credit cannot be used for SGST). This cross-utilization restriction requires careful tax planning and cash flow management.

GST significantly impacts pricing and profitability: (1) Price Reduction/Increase: When GST replaced pre-GST tax structure, some goods became cheaper (reduced cascading), others costlier (higher effective rate). Example: Restaurants without ITC saw cost increase; manufacturing with full ITC saw cost decrease. Businesses had to reprice products post-GST. (2) ITC-Driven Profitability: Pre-GST, VAT/excise paid on inputs was often stuck in credit ledgers or not available at all. Post-GST, seamless ITC across supply chain reduces tax cost. Example: If your pre-GST total tax cost (embedded VAT, excise, service tax) was 20%, but post-GST with full ITC it's 12%, you can either reduce price (gain market share) or maintain price (improve margins). (3) Working Capital Impact: Pre-GST, tax refunds took months/years. Post-GST, ITC is almost instant (available next month). This improves cash flow. However, reverse is also true—you must pay GST monthly even if customers haven't paid you (unlike service tax where you could pay on receipt basis under small taxpayer exemption). (4) Pricing Strategy: Cost-Plus: Calculate total cost (material, labor, overhead) + desired margin + GST = selling price. Competitive: Market-driven price is fixed; you extract GST, then optimize costs to maintain margins. Volume: Lower prices (absorb some GST) to increase volumes; profitability through scale. (5) Interstate Sales: Pre-GST, CST at 2% with no ITC was a barrier. Post-GST, seamless interstate trade enables pan-India expansion. (6) Compliance Costs: Monthly returns, reconciliation, audits add costs—budget ₹1,000-5,000/month for CA fees, software subscriptions. Strategic Insight: Businesses that efficiently manage ITC, optimize vendor selection, streamline compliance, and adjust pricing intelligently have actually improved post-GST profitability despite initial teething issues.

Common GST errors and prevention: (1) Wrong Tax Rate Application: Error: Applying 18% instead of 12% or vice versa. Prevention: Always verify HSN/SAC code and applicable rate from GST rate finder or CBIC notifications. Maintain a rate master list. When in doubt, consult CA. (2) Place of Supply Confusion: Error: Treating Delhi to Haryana supply as intrastate (applying CGST+SGST instead of IGST). Prevention: Clearly identify supplier location (your GSTIN state) and recipient location (customer GSTIN/billing state). Different states = IGST; same state = CGST+SGST. (3) CGST/SGST Split Errors: Error: On ₹10,000 base with 18% GST (intrastate), showing 10% CGST + 8% SGST instead of equal 9%+9% split. Prevention: Always split exactly 50-50 for intrastate supplies. (4) Reverse Calculation Mistakes: Error: To find base price from ₹11,800 inclusive of 18% GST, incorrectly deducting ₹11,800 - 18% = ₹9,676. Correct method: ₹11,800 / 1.18 = ₹10,000 base; GST = ₹1,800. Prevention: Use correct formula—Inclusive price ÷ (1 + Rate/100) = Base price. (5) Rounding Off Issues: Error: Sum of line item GST doesn't match total invoice GST due to rounding. Prevention: Per CBIC guidelines, invoice-level rounding to nearest rupee is permitted. Show clear rounding adjustment line. (6) ITC Set-Off Errors: Error: Using SGST credit to pay CGST liability (not allowed). Prevention: Understand ITC utilization rules—IGST first, then CGST for CGST, SGST for SGST. (7) Compound Supply vs Mixed Supply: Error: Applying wrong rate for bundled goods/services. Prevention: Understand principal supply concept for compound supply (rate of principal supply) vs mixed supply (rate of highest-taxed item). (8) Time of Supply Confusion: Error: Accounting GST in wrong tax period leading to return mismatches. Prevention: Follow time of supply rules—for goods: removal/delivery/invoice, whichever earliest; for services: invoice/payment, whichever earliest. Always use GST software or calculator, reconcile regularly, and conduct internal audits to catch errors before authorities do.

Composition scheme is a simplified GST compliance option for small businesses: Eligibility: (1) Annual turnover up to ₹1.5 crore (₹75 lakh for special category states). (2) Not engaged in interstate supply or e-commerce. (3) Not a manufacturer of specified goods (ice cream, pan masala, tobacco). (4) Not providing restaurant or certain other services. Features: (1) Fixed tax rate: 1% for manufacturers/traders, 5% for restaurants, 6% for other services (on turnover, not profit). (2) Quarterly return GSTR-4 only (no monthly compliance). (3) Annual return GSTR-9A. (4) No detailed invoices, books, or documentation required. Restrictions: (1) Cannot charge GST from customers (must mention "composition taxable person" on invoices). (2) Cannot claim Input Tax Credit on purchases. (3) Cannot make interstate supplies. (4) Cannot supply through e-commerce platforms. Should you opt: Opt if: Your ITC claim is minimal (mostly B2C sales to unregistered persons), compliance burden is overwhelming, you want to focus on business not GST returns, your margin is healthy enough to absorb GST without passing on to customers (since you can't charge separately), your customers are end consumers who don't need ITC. Don't opt if: Significant B2B sales where customers need ITC-compliant invoices, you're in manufacturing/trading with high input costs where ITC provides substantial savings, you plan interstate expansion or e-commerce sales, your margin is low and cannot absorb full GST cost. Example: A neighborhood kirana store with ₹50 lakh turnover, 90% sales to consumers, limited ITC—composition makes sense. A wholesaler with ₹1 crore turnover selling to retailers who need ITC—composition doesn't work. Once opted, you're stuck for full financial year—choose carefully after cost-benefit analysis.

GST audits are conducted to verify compliance and detect evasion: Types of audits: (1) Annual Audit: If turnover >₹2 crore, you must conduct self-audit by CA and file GSTR-9C reconciliation statement. Not a department audit but mandatory verification. (2) Special Audit: Under Section 66, Commissioner can order special audit by CA/Cost Accountant if he suspects tax evasion or irregularity. (3) Departmental Audit: Under Section 65, GST officers can audit registered persons based on risk parameters, data analytics flags, or specific intelligence. Typically those selected have turnover >₹5 crore, or ITC claims disproportionate to turnover, or inconsistent return filing. Audit triggers: Mismatch between GSTR-1 and GSTR-3B, high ITC claims relative to industry standards, frequent amendments in returns, discrepancies in GSTR-2B vs claimed ITC, nil or low GST payment despite high turnover, intelligence reports, random selection. Audit process: Notice issued (ADT-01) 15 days in advance specifying records required. Present all books, invoices, ledgers, bank statements, purchase orders, delivery chalans, contracts, e-way bills, returns filed. Officer examines records, asks queries, may visit business premises. Issues audit report (ADT-02) with findings. If discrepancies found, show cause notice (SCN) for tax demand + interest + penalty. Preparation tips: (1) Reconcile GSTR-1, GSTR-3B, GSTR-2B monthly—fix mismatches immediately. (2) Maintain complete documentation: purchase invoices, sales invoices, e-way bills, GST payment challans, bank statements, stock registers. (3) Ensure ITC claims are fully supported—supplier GSTR-1 filed, payment made, goods received. (4) Prepare explanations for genuine business scenarios (high ITC due to capital purchase, low turnover due to seasonal business). (5) Hire experienced CA for audit representation. (6) Be cooperative but don't volunteer information beyond asked. (7) If demand raised, evaluate merit—consider accepting if legitimate, or filing appeal if unjustified. Best defense: Maintain clean, accurate records from day one. Prevention is better than dealing with audit stress and potential tax demands.