How gst is calculated?

Answer 1

How does GST work?

GST is effective from July 1; the new tax regime subsumed a huge number of central and state taxes into one and only tax, opening the gate of a common national market. Started from open flow of goods and services to removal of cascading of taxes, the possible benefits to Indian economy are diverse. It is supposed that GST could lift GDP or gross domestic product development simply by 1.5-2% in the long way.

Download Android App - GST Calculator & GST guide - HSN Codes

How does GST work?

GST is a usage based tax/levy and is depend on the "Destination principle." Most importantly, GST is applied on goods and services at the end where final/actual consumption takes place.

GST is applied on value-added goods and services at every stage of sale or acquisition in the chain of supply. GST need to pay on the obtained of goods and services can be set off against that allocated on the supply of goods or services. The makers or wholesaler or retailer will pay the appropriate GST rate but will claim back through tax credit method.

However, being the final person in the supply chain, the ending consumer has to stand this tax and so, in many prospective; GST is similar to a last-point retail tax. GST need to collect at the point of Sale.

Download Android App - GST Calculator & GST guide - HSN Codes

· GST is focused on the standard of value added tax and any "input tax method" or "calculation" method, with focuses on controlled compliance and accounts depend on the system.

· It is an inclusive levy and set on both goods and services at the similar rate with advantage of input tax credit or calculation of value of penultimate deal value.

· Least number of floor rates of tax, normally, not beyond two rates.

· No possibility for levy of cess, re-sale tax, extra tax, special tax and even turnover tax.

· There is no scope for numerous levies of tax on goods and services, which includes sales tax, entertainment tax, entry tax, octroi and luxury tax among others.

· Zero score of exports and inter- state sales of goods and delivery of services.

· Taxing of capital goods and inputs no matter goods or services relevant to manufacture at lesser rate, so as to decrease inventory carrying cost and price of production.

· An ordinary law and process throughout the country under a single direction.

· GST is an end based tax and levied at only point at the time of using up of goods or services by the ultimate user.

Download Android App - GST Calculator & GST guide - HSN Codes