Calculation of GST

How to calculate GST through Aggregate Turnover?

By Ankar Kapuria Published On 23 Oct 2021 Updated On 28 Oct 2021 Category GST

Business in India has taken a huge turn since the inception of GST Registrations. This has brought different taxes under one umbrella. The tax system runs smoothly as a result of it. It provides transparency in the tax collection.

What is a GST?

GST is a centralized tax system that was incorporated in the nation in the year 2017. It was passed by the parliament on the 29th of March 2017. It was imposed in the Indian market on the 1st of July in 2017. The GST registration process has evolved from the concept of VAT (Value Added Tax). This is added at each stage of the business. It is an indirect tax and has replaced many other forms of taxes in the business structure. The calculator of excise tax has several factors that need consideration. A GST number is given to a company once they get registered and this helps the government keep track of the tax-paying business and detect tax evasions. 

What is the GST Calculation Process?

The calculation of  VAT happens in a simple way but under certain conditions. Some of the rules that need to be kept in mind while doing the  taxations. The GST is calculated on the turnover of a company. To get the turnover of a company the total value of taxable supplies, exempt supplies, export of goods or services, and inter-state supplies. Then they need to find out the cost of the value of the inward supplies, the value of supplies that are taxable under reverse charge, and the value of non-taxable supplies.

The excise duty is calculated after the calculation is done of the turnover of the company. To calculate the indirect tax the company has to follow the percentage that is levied in the state they function in and pay accordingly. The service tax  is the Original cost of goods multiplied by the Good and Services Tax percentage and then divided by 100 to get the tax amount that needs to be paid.

(Original Cost X GST Percentage)/100 = GST amount.

What is the GST Structure for Business Structures?

There are two categories in which business functions, the normal category, and the special category. For the normal category states if the turnover for goods is 40 lakhs up to 1.5 crores they can file an under-compensation scheme. This also applies to the special category, and the turnover is reduced to 20 lakhs up to 75 lakhs.

On the other hand, if the turnover for the services is more than 20 lakhs but up to 50 lakhs then they can file an under-compensation scheme. For the special category, the amount is reduced to 10 lakhs. The calculation of the outward tax payable is done on the turnover for the compensation scheme. Above the above-mentioned amount, the company has to pay Service Tax to the government and follow the compliance rules. There are also ways in which businesses are now paying and keeping themselves updated with the online GST information.

How do business structures decide the GST percentage?

There are various types of businesses that are happening and each has its own set of rates based on the services offered and the value to the society. The various products and their GST percentages are:

  1. For Goods:

    • Nil - Hulled Cereal Grains, Sanitary Napkins, etc.

    • 0.25%- Cut and semi-polished Stones.

    • 5%-  Sugar, spices, edibles oils, etc.

    • 12%- Compute, Monitor, Spectacles, etc.

    • 18%- Soaps, Hair Oils, etc.

    • 28%- AC, Refrigerator, etc.

  2. For Services: 

    • Nil- Basic service for PMJDY account, etc.

    • 5%- Rental Cab Services, Ait Travel, etc.

    • 12%- Movie tickets under 100, etc.

    • 18% Outdoor catering, Theatre, etc.

    • 28%- Amusement Parks, Go-Karting, etc.

GST applies to Gold and real estate Businesses too. There are also products that will soon come under the GST Category such as Petroleum products like petrol and sisel, Land, Electricity, and many more.

Conclusion

Applying for a GST Number for any business has become one of the most important parts of the business setup today and without it, there is no way forward. A nation can not progress without the payment of taxes by the public to the government. It is the various kinds of business that help garner revenue and help increase the GDP of the nation. Thus having proper knowledge of the business structure and the tax structures help in calculating the business-related turnover, Tax, and revenue at the end of the day.


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