#igst

[gstservices]

Simplifying GST: How to Calculate Your Tax Payments Step-by-Step

The Goods and Services Tax (GST) has transformed the taxation system in India by consolidating a plethora of indirect taxes. Besides, achieving the aim of making compliance simple and easy, this transformation has also made the movement of goods and services all over the nation easier. While GST has brought a unified taxation structure for consumers, regarding calculations it can be a bit complex especially, for businesses sometimes they get confused regarding the calculations of GST. Calculating GST correctly is paramount one for the legal compliance and the other for sustaining the general health of the financial system within the business. To business owners, accountants or mere self-employed people, understanding how to calculate GST payments in a step by step process will be very crucial since this will enable you reduce on penalties and also enable you work smoothly.

Understanding the Basics of GST

GST is a complex system that every business owner needs to understand before adopting it. In this blog let us take a look at a basic rundown of GST. However, to embark on calculations, special attention should be paid to the structure and elements of GST. This knowledge will serve as the for foundational understanding of the tax regime and how to compute the correct rates and credits.

1. CGST and SGST/UTGST:

These taxes are applied when the supplying and receiving parties are in the same state or union territory respectively. In such cases:

Central GST (CGST): Gathered by the center administration of the country.

State GST (SGST) or Union Territory GST (UTGST): The sample is collected by the government of the respective state or union territory.

For example, if a business in Delhi sells goods worth ₹1,00,000 to a customer in Delhi with an 18% GST rate, the tax will be split equally:

CGST: ₹9,000

SGST: ₹9,000

2. IGST:

Integrated GST (IGST) is levied on inter-state transactions, where the supplier and recipient are in different states or when goods are imported into India.

IGST ensures seamless input tax credit across state borders, eliminating the cascading effect of taxes. 

For example, if a business in Haryana sells goods worth ₹1,00,000 to a customer in Maharashtra at an 18% GST rate, the entire tax (₹18,000) is collected as IGST.

3. GST Rates:

In line with various economic policies and sectors needs, the GST council has divided goods and services into several tax rates. Here’s an overview of the common tax rates:

5%: These comprise of products like processed food, transport services, and even drugs.

12%: Ordinary products like processed food, cloth and apparel, household utensils and furnishings, etc.

18%: Most products and services category range, where the prices of electronics, restaurants, and IT solutions can be set.

28%: Car, tobacco and other luxury products and services and other financial services.

There are some products and services that anyone cannot do without, for example, perishable food articles, and some health services are out of the GST system so as to cost the common man heavily if subjected to the tax. Further, compensation cess may be levied on any item in the 28 % slab for instance luxury car and aerated drink.

• ₹ 20 lakh for services and ₹10 lakh for services in special category states.

• ₹40 lakh for goods, (₹20 lakh in special category states) and healthcare, are exempt from GST to ensure affordability. Additionally, compensation cess may apply to specific items in the 28% slab, like luxury cars and aerated drinks (while certain healthcare services are exempt, food articles are not universally exempt from GST. It would be beneficial to specify that GST exemptions may vary based on the classification of goods or services, and some perishable food items may fall under lower GST slabs rather than being entirely exempt)

.4. GST Registration Thresholds:

Businesses need to register for GST if their annual turnover exceeds:

₹10 lakh for services for the special category states

₹40 lakh for goods (₹20 lakh in special category states).

There is another tiny, Optional Composition Scheme for small taxpayers having a turnover below a threshold limit and they pay GST at a fixed rate

Key Components for GST Calculation

In order to arrive at your GST liability figures, it is important that you have a grasp of the key contouring factors which are deployed at the time of calculation. These elements would ensure that its structure conforms to the GST and enable you make the best of taxes.

1. Invoice Value

Invoicing value is the price of the goods or services apart from the GST tax which is to be charged. This is the amount on which the overall tax otherwise known as GST is charged. The invoice should include:

Product or service details.

Quantity and price of the goods or services.

Applicable discounts (if any).

For example: If a business sells a product with a base price of ₹50,000 and offers a 10% discount, the taxable value is: ₹50,000 - ₹5,000 = ₹45,000. GST is then calculated on ₹ 45,000/- together with other related charges.

2. GST Rate

The credit of GST is available to manufacturers of goods as well as it is also levied based on the type of goods. Another important factor I have discussed before is that the tax structure of GST in India is divided into several bands, which are 5%, 12%, 18%, and 28%.

Check the appropriate GST tax rate in a given product or service on the government published listing or go through the HSN code.

Penalties may be charged from wrongly classified rates hence the need for accuracy.

For example:

The commodities that include packed food items may be chargeable with 5% GST.

Electronic products like laptops are normally charged 18% GST.

3. Input Tax Credit (ITC)

Input Tax Credit (ITC) is another component of GST which is extremely popular with the registered dealer. It enables the business organization to offset the amount of GST charged on purchase materials used in the performance of business.

While implementing the ITC, the amount of tax paid on inputs which is purchase is deducted from the total amount tax collected on outputs which is sales.

Eligibility for ITC:

ITC is allowed when the goods or services for which credit availed are used solely and exclusively for business purposes.

The supplier has to have uploaded this invoice for the GST portal, and the buyer has to pay it on time.

Example of ITC Calculation:

A business buys a goods or service worth ₹1,00,000 having GST of 18%. The GST paid is: ₹1,00,000 × 18% = ₹18,000.

The same business sells the finished goods for ₹2,00,000 with 18% GST. The GST collected is: ₹2,00,000 × 18% = ₹36,000.

The net GST payable after ITC is: ₹36,000 - ₹18,000 = ₹18,000.

Key Points to Remember for ITC:

ITC cannot be claimed on personal expenses or goods and services listed under the negative list.

Maintain accurate records of all purchases and invoices to support ITC claims.

4. GST Liability (Output Tax)

The GST liability is the total tax amount which you have to pay to the government excluding ITC. It is calculated as: GST Liability = GST on Sales (Output Tax) - ITC (Input Tax Credit)

For example:

GST on Sales: ₹50,000

ITC: ₹30,000

Net GST Liability: ₹50,000 - ₹30,000 = ₹20,000.

5. Reverse Charge Mechanism (RCM)

At times, the protected receiver of goods or services charged by the supplier under the Reverse Charge Mechanism (RCM) has to pay GST instead of the supplier.

This in applies for example, services from companies that were not licenced prior to the law came into force and imported good/raw materials.

Under RCM, the recipient has to pay the GST upfront and can claim credit only if he is registered.is required to pay GST under the Reverse Charge Mechanism (RCM) instead of the supplier.

Step-by-Step Guide to GST Calculation

Step 1: Determine the Type of Transaction

Intra-State Transactions

GST is split into CGST (Central GST) and SGST (State GST), each receiving an equal share.

Inter-State Transactions

Only IGST (Integrated GST) is applied for transactions across state boundaries.

Step 2: Identify the GST Rate

GST rates depend on the type of goods or services. Common slabs are 5%, 12%, 18%, and 28%.

Examples:

Essential goods: 5% (e.g., food grains).

Standard goods: 12% or 18% (e.g., electronics).

Luxury goods: 28% (e.g., cars).

Step 3: Calculate GST Amount

1. For Intra-State Transactions

Divide the total GST equally into CGST and SGST.

Formula:

CGST = (Invoice Value × GST Rate) ÷ 2

SGST = (Invoice Value × GST Rate) ÷ 2

Example:

Invoice Value: ₹10,000

GST Rate: 18%

CGST = (₹10,000 × 18%) ÷ 2 = ₹900

SGST = ₹900

Total GST = ₹1,800

2. For Inter-State Transactions

IGST is calculated on the entire transaction value.

Formula:

IGST = Invoice Value × GST Rate

Example:

Invoice Value: ₹10,000

GST Rate: 18%

IGST = ₹10,000 × 18% = ₹1,800

Step 4: Factor in Input Tax Credit (ITC)

Input Tax Credit (ITC) reduces your tax liability by subtracting the GST paid on purchases from the GST collected on sales.

Formula:

Net GST Payable = Output Tax – Input Tax

Example:

Output Tax: ₹20,000

Input Tax: ₹10,000

Net GST Payable = ₹20,000 – ₹10,000 = ₹10,000

Step 5: Include Reverse Charge Mechanism (RCM)

For specific transactions, the recipient pays GST under the Reverse Charge Mechanism (RCM).

Example: If importing goods worth ₹1,00,000 at an 18% GST rate:

RCM GST Payable = ₹1,00,000 × 18% = ₹18,000

Step 6: Finalize GST Filing

Calculate the total GST payable after deducting ITC and any RCM liability. File GST returns through:

GSTR-1: Outward supplies.

GSTR-3B: Summary and payment.

Filing GST Returns

After calculating your GST liability, the next critical step is filing the appropriate GST returns to stay compliant. Here’s a brief overview of the common GST returns:

1. GSTR-1: Outward Supplies (Sales)

This return entails all details of outward supplies or sales made during a particular period.

Key Points:

Report invoice-wise details of B2B transactions.

Consolidated summary for B2C transactions.

Due Date: By the 11th of the following month for fiscal monthly filers.

2. GSTR-3B: Summary Return for Tax Payments

This is a simplified return for filing the summary of outward and inward supplies made during the period accompanied by payment of taxes.

Key Points:

Declare total sales, tax liability, and input tax credit.

Offset ITC against GST liability and pay the net amount.

Due Date: on the 20th of the following month if the return is filed monthly.

3. GSTR-2A/2B: Inward Supplies (Purchases)

These are auto-drafted returns that show details of inward supplies (purchases).

Key Points:

GSTR-2A form is auto populated and is updated every time.

GSTR-2B is static and fixed for a given period, aiding ITC reconciliation.

4. GSTR-9: Annual Return

This return is the summarized return of all the GST transactions in a particular financial year.

Key Points:

Required for any Tax Payer with a turnover or turnover limit of more than ₹2 crore.

Includes details from GSTR-1 and GSTR-3B.

Due Date: 31st December of the following financial year.

Common Mistakes to Avoid in GST Calculation

If not properly calculated, GST poses serious compliance problem or even financial loss to the businesses that compute it. Here's how to sidestep common pitfalls:

1. Incorrect Classification of Goods/Services

Failure to apply the right GST rate on goods or services is common among businesses. Such errors cause either under or over payment of tax thus attracting penalties.

Tip: Please check the official GST Rate Chart and keep yourself updated with any changes in it.

2. Overlooking ITC Eligibility

If you do not avail all the ITC as are possible then your tax burden goes up. ITC is admissible only in respect of the inputs that are incurred solely for the supply of business products accompanied by a valid invoice.

Tip: Regularly review and reconcile ITC claims against purchases in GSTR-2B.

3. Late GST Payments

Failing to pay GST leads to the accrual of an 18% of annual interest on the amount of tax as well as the fees for the returns.

Tip: Schedule the filing due dates and ensure that the payments are made automatically in order not to be left behind.

4. Errors in Invoice Details

Discrepancy in the invoice figures particularly GSTIN number, the taxable value, or the tax amount rates can lead to distortion of GST reconciliation as well as hinder ITC applications.

Tip: Ensure one verifies all invoices on cases of customer generation or uploading the same to GST portal.

Tips for Accurate GST Calculations

To ensure precision and compliance, follow these best practices:

1. Automate GST Calculations

This approach is very unproductive and full of many avenues of error. Accounting software with GST modules can be used to ease the process since the right templates for filing of the forms are already incorporated in the software.

Popular Options: Tally, Zoho Books, QuickBooks.

2. Keep Detailed Records

Preservation of records for sales, purchases and taxes is very important during auditing and balancing.

Tip: Scanned all documents and copies should be made often in order to avoid loss and for quick access.

3. Reconcile Regularly

This means that, when books are matched with GST returns, there are no compliance issues in terms of taxes.

Tip: Before availing credit on ITC, ensure that there is a match between GSTR-2A/2B with the purchase register.

4. Stay Updated

GST laws, laws and guidelines related to it and the methods of its functioning may alter from time to time. Trying to remain updated will save you from making much more mistakes not to mention the penalties that you are likely going to encounter.

Tip: Subscribe to government updates or consult tax professionals for the latest information.

Conclusion

Determining gross amount right to the last penny of GST is very important because of compliance issues as well as efficiency of the business. Understanding the structure of the GST tax, applying the right formulas and using technology most of the time makes the exercise a breeze. There are certain mistakes that people make while preparing and analyzing financial data, and by avoiding them, maintaining records accurately while using the best computer software to calculate the financial data, business people can save a lot of time while avoiding needless errors which could lead to the losing of marketing opportunities.

At The Legal Dost, we lay emphasis when it comes to handling complicated compliances which are as follows – GST Calculation and GST Filing. Small business or large business, the advice and services provided guarantee precision and no mistake. Join with us to enhance your tax solutions and bring your business towards success.

[jhasravi]

Govt. of India amends Export duty on some variety of rice

Govt. of India amends Export duty on some variety of rice

“Indirect Tax I Arbitration I Customs & FTP I Advisory I Litigations” Dated: 23.10.2024 Govt. of India amends Export duty on some variety of rice Variety of Rice in the table which were amended by Notification no 44/2024 of CBIC on 22nd October 2024. 16A10061090Rice in the huskNIL26B10062000Husked (Brown) RiceNIL36C10063010Rice, ParboiledNIL Variety of Rice with NIL Export duty as per…

[eazybillssoftware]

A Complete Guide to GST Registration

GST registration has become an important aspect for any business. The full form of GST is Goods and Services Tax, which is a comprehensive indirect tax charged on the supply of goods and services within Indian territory, and GST registration is compulsory for businesses with a certified annual turnover that differs from business to business. 

The Goods and Service Tax Act was introduced by the Indian government on July 1, 2017. The introduction of GST aimed to simplify the indirect tax system in India by merging multiple taxes into one and improving the tax collection process.

Types of GST 

In order to know the GST tax liability of a business, it is essential to know the type of GST:

State Goods and Services Tax (SGST): It is the tax charged on the sale of services and products within a state. It eradicated earlier taxation that included entry tax, state sales tax, entertainment tax, surcharges, and others. 

Central Goods and Services Tax (CGST): It is charged by the central government on the supply of intra-state products. It replaced many taxes like service tax, central excise duty, and customs duty. 

Union Territory Goods and Services Tax (UTGST): It is applicable to the sale of products and services in Union Territories like Andaman, Nicobar, and Chandigarh, among other union territories. 

Integrated Goods and Services Tax (IGST): This tax is charged on the sale of interstate products and services. 

Applicability of GST Registration 

According to the GST Act, any business that fulfills any of the below-mentioned criteria is bound for GST registration. 

Businesses that cross the annual turnover threshold of Rs. 40 lakh are liable for online GST registration. 

Any individual selling goods through an e-commerce platform is also liable for GST registration. 

Non-residents and casual taxable persons should also file GST.

To ensure the smooth functioning of GST registration, it is important for the above-mentioned people or firms to file for GST and comply with the related eligibility and documentation to avoid any penalties and future hurdles. 

List of the Top Benefits of GST Registration 

There are various benefits of GST registration that you, as an individual or business, can avail of. Below are some of the top benefits of GST registration: 

Eradication of the cascading effects: The introduction of GST removes the cascading effects of earlier indirect taxation, causing dual taxation at every step. GST registration has reduced the tax liability of business entities. 

Easy registration procedure: The process of GST registration can be easily done through the GSTN portal, making it time-efficient and easy. 

Lesser compliance: Earlier businesses had to file several returns accorded with different indirect taxes like VAT, excise, and service tax. But GST is a single tax regime, so it lowers the number of filings, making it less problematic for businesses to file a return. 

Transparency: Registration under GST consists of various provisions such as compliance, payment of taxes, and perks of input credit, ensuring clarity in the tax collection system. 

Regulation of the unorganized sector: GST registration also helps to regulate the unorganized sector, like construction sites. 

Final Words Whether you are a small business owner or a large business owner, or freelancer the GST registration services can help you gain certain benefits. You can easily track your registration process through GSTIN on the GST portal. If you are looking for reliable GST billing software that assists you with GST registration and compliance requirements, then consider Eazybills, as it is a one-stop solution for all the billing requirements, as it is easy to use software that doesn’t require any additional training.

[taxfilingventure]

Leveraging the benefits of GST LUT filing streamlines export processes, facilitating seamless transactions without the burden of paying IGST upfront. Explore the advantages and requirements of GST LUT filing on our blog.

[mygstrefund]

What is PFMS and why IGST Refund stuck at PFMS?

Discover #PFMS and understand why your #IGSTrefund may be stuck. Navigate the intricacies for smoother refunds. Get insights now!

Read Our Detailed article in the below link 👇- https://www.mygstrefund.com/What-is-PFMSandwhy-IGSTRefund-stuckat-PFMS/

THANKS FOR READING! We provide GST refund solutions for customers.

To know more please visit: www.mygstrefund.com Join Our Community: community.mygstrefund.com Contact Us: +91 9205005072 Mail- info@mygstrefund.com

[newsorbiter]

India records robust GST collections of ₹1.62 lakh crore in Sept 2023

In September 2023, India's gross Goods and Services Tax (GST) revenue soared to ₹1,62,712 crore, marking a remarkable 10% year-on-year growth. This achievement signifies the fourth instance in the fiscal year 2023-24 that GST collections have exceeded the ₹1.60 lakh crore threshold. This impressive performance in September was fueled by a breakdown of collections as follows: Central GST (CGST) accounted for ₹29,818 crore, State GST (SGST) stood at ₹37,657 crore, Integrated GST (IGST), which includes ₹41,145 crore from imports, reached ₹83,623 crore, and cess collected amounted to ₹11,613 crore, with ₹881 crore sourced from imports. In terms of distribution, the government distributed ₹33,736 crore to CGST and ₹27,578 crore to SGST from IGST. Consequently, after the standard settlement process, the total revenue for the Centre and states in September 2023 amounted to ₹63,555 crore for CGST and ₹65,235 crore for SGST. This remarkable performance in September 2023 reflects a 10% increase compared to GST revenues in the same month of the previous year. Specifically, domestic transactions, including imported services, contributed to a 14% surge in revenues compared to September of the previous year. For the first half of fiscal year 2023-24, ending in September 2023, the total gross GST collection reached ₹9,92,508 crore, marking an impressive 11% year-on-year increase compared to the same period in the previous fiscal year, which recorded ₹8,93,334 crore. This robust performance has led to an average monthly gross GST collection of ₹1.65 lakh crore in fiscal year 2023-24, an 11% increase over the monthly average of ₹1.49 lakh crore recorded in the first half of fiscal year 2022-23. The data also reveals notable variations in GST revenues across states and union territories in September 2023. States such as Jammu and Kashmir, Rajasthan, Telangana, and Tamil Nadu witnessed substantial growth in their GST revenues, ranging from 10% to 33%. In contrast, some regions, including Lakshadweep and Manipur, experienced declines. In terms of post-settlement SGST revenue from IGST, states like Ladakh, Chhattisgarh, Madhya Pradesh, and Gujarat saw significant increases, while Dadra and Nagar Haveli and Daman & Diu reported a decrease. Overall, the combined SGST and SGST portion of IGST settled to states and union territories marked a 15% growth in April-September 2023 compared to the same period in the previous fiscal year. This robust performance in GST collections demonstrates the resilience and economic vitality of India's tax ecosystem, signaling positive economic prospects for the nation. Read the full article

[babatax]

GST registration compulsory for interstate supply?

GST registration compulsory for interstate supply: Interstate supply under GST means when the goods or services provider is in a different state or Union Territory, and the place of supply is in a different state or Union Territory. The supplies involving import, export, or supply to or from a Special Economic Zone (SEZ) unit or Export-oriented Unit (EOU) are also considered interstate supplies.…

[sundaethinker]

A Detailed Overview on highlights of the 50th GST Council Meeting

The 50th GST Council meeting, led by Union Finance Minister Nirmala Sitharaman, was held on July 11, 2023, at Vigyan Bhawan, New Delhi. This meeting focused on rate decisions, clarifications, and recommendations related to GST on goods and services. In this blog post, we will delve into the highlights of the 50th GST Council meeting and explore the key takeaways.

Recommendations with regard to GST on goods

Reduction of GST rates on specific goods

1. Uncooked/unfried snack pellets: Rate reduced from 18% to 5%. 2. Fish soluble paste: Rate reduced from 18% to 5%. 3. Imitation zari threads/yarn: Rate reduced from 12% to 5%. 4. LD slag: Rate reduced from 18% to 5% to be at par with blast furnace slag and fly ash.

IGST exemption on certain medicines and FSMP

1. Dinutuximab (Quarziba) medicine imported for personal use.

2. Medicines and FSMP used in the treatment of rare diseases when imported by Centres of Excellence for Rare Diseases or any recommended person/institution.

Clarification on the taxable nature of supply

Supply of raw cotton by agriculturists to cooperatives, including kala cotton, is taxable under reverse charge mechanism.

To read more visit Swipe Blogs

[livemintvideos]

GST Benefits in Budget 2023 - Cheer to some | Mint Primer | Mint

North-eastern states have recorded a compounded annual GST revenue growth rate of 27.5% so far since the implementation of the GST as against 14.8% for all states, making them the biggest gainers of the new indirect tax regime. The north-eastern states have been the biggest beneficiaries of the five-year-old goods and services tax (GST) regime, according to the Reserve Bank of India (RBI) report on State Finances.

[hellcatsworld]

TELL YOUR KIDS

I swear to god

Not telling your kid they have a learning disability, chronic illness, mental illness etc. so they can “feel normal” actually does the opposite. They will not feel normal if they do not have the context to understand that their normal will be different from that of their peers.

[accountingsikhehindime]

GST Notes PDF in Hindi, Tally Prime GST Pdf Download 2023

नमस्कार दोस्तों इस पोस्ट मे आज मे आप को GST Notes PDF तथा Tally Entry with GST PDF देने वाला हु। जिसे पढ़ कर आप आसानी से अपने Tally Course with GST को Complete कर सकते हैं। क्योंकि बहुत से लोग Tally सीखने से पहले GST के बारे में जानकारी प्राप्त नहीं करते हैं। और Tally Course को Join कर लेते हैं। इसलिए वे एक Professional Accountant की जगह एक Tally Data Entry Operator बन जाते हैं। इसलिए आज मे आप…

[jhasravi]

SJ EXIM Services India- IGST Refund claim against Manual Exports Shippin...

[shadthchan052-blog]

HELLO POOKIE

AM BOUTTA GO TO SCHOOL FOR TWO DAYS SO I WON'T BE BACK IGST

SO FEEL FREE TO LEAVE SOME ASK IN MY ASK ACC

mod: got it! XD

[callmedangervest]

imfd gobab vey andyace a swizture bcauhn igst a gi polaed akjjhudu

"What does that mean-?"

[whspermy-name]

Igst so funny to me I'll say something really weird like "LANSODHLSHDK HELP I ATE 32 RABBITS AND VOMITYED IT ALL UP ON MARS" or "BYEEE I DROPKICKED A KANGAROO AND ADOPTED THREE CHILDREN FOR 10 CENTS" or just straight up "I started microwaving hampetsers" because everytime the reaction is just like "what."