This article is written by Shakchi Verma, Amity university Lucknow, 1st year LLM student, during her internship at LeDriot India.
KEYWORDS
• Goods and Services Tax (GST)
• Duty is paid
• Calculated on the basis of
• Classified into five beams
• Important for both businesses and consumer
INTRODUCTION
Goods and Services Tax (GST) is a- stage, destination- predicated duty that is levied on every value addition. It’s a consumption- predicated duty, where the duty is paid by the end consumer. GST is calculated on the base of the taxable value of the goods or services supplied. The taxable value is the price at which the goods or services are supplied, less any abatements or abatements. GST is levied at different rates on variety of goods and services. The GST rates are classified into five beams 0%, 5%, 12% and so on. Getting to know how to calculate Goods and Services Tax (GST) is important for both businesses and consumers in India. GST, being a multi-stage, destination-based tax, is applied to the value added at every stage of the supply chain.
HISTORY OF GST
The whole journey of GST began from the year 2000 and it took 17 years for the law to evolve. The history of GST traces back more than 20 times ago to the time 2000 when the first discussion with regard to India espousing GST was made at a time when the government of Atal Bihari Vajpayee was in power. An empowered commission of state finance ministers was chosen for this purpose since they had previous experience working with State Handbasket. The financial Responsibility and Budget Management Committee was formed in 2004, and the Committee recommended the preface of GST. During the 2006- 07 Budget Speech, the also Union Finance Minister blazoned that GST would be introduced by April 1, 2010. still, for various reasons, the preface of GST had to be pushed further. The Constitution (115th Amendment) Bill, 2011, was introduced in the congress. This Bill was introduced to incorporate certain parts of GST and was examined in detail by a Standing Committee. With the dissolution of the Lok Sabha in 2014, the Bill lapsed, therefore warranting the need for a new indigenous Correction Bill. The Constitution (122nd Amendment) Bill introduced in the Lok Sabha concentrated on introducing GST.
In 2015, the Bill was passed by the Lok Sabha and appertained to a Select Committee in the Rajya Sabha. The Select Committee submits the report. Chief Economic Advisor- led Committee submits a report on the possible GST rates.
In 2016, the Bill is passed by both the Lok Sabha and the Rajya Sabha and is also notified as the Constitution (101st Amendment) Bill. The first state to confirm the Bill in Assam. The President gives his assent to the Bill. Approval for the setting up of the GST Council was also given by the Union Cabinet, following which the first meeting of the council was held in New Delhi.
In 2017, the CGST Bill, IGST Bill, UTGST Bill, and GST (Compensation to States) Bill is introduced in the Lok Sabha. The Bills are passed by the Lok Sabha and the Rajya Sabha, after which the GST Acts are notified. The GST Council notifies GST rates/cess on various goods and services. 1st July, the sanctioned rollout of GST.
HOW IS GST CALCULATED?
There are various ways to calculate the GST liability on the force of goods and services. The most convenient way to do so is to follow the below- mentioned way to calculate the GST amount:
• Determination of the rate of GST which is applicable to the goods and services that you’re dealing with.
• Determination of the total value of the goods and services on which GST is supposed to be calculated.
• Next, calculate the amount by multiplying the sale value with the GST rate applicable to the goods and services under consideration.
• Calculate the gross amount to be paid, including GST, by adding the amount to the sale value.
EXAMPLE OF GST CALCULATION
Suppose a good is sold at Rs. 4,000, and it falls under the 12% GST slab rate.
In this case, the net price payable for the good will be Rs.4,000 + 12% of Rs.4,000 = Rs.4,000 + 480 = Rs.6,480.
CONCLUSION
Understanding and calculating GST is a very crucial aspect of business operations and consumer in India. Keeping the rates classification in mind, and following the step-by-step process outlined in this article, business can ensure accurate GST compliance. The ability to calculate GST correctly not only avoids penalties and fines but also contributes to a healthy financial standing or position.
REFERENCES:
• Goods and Services Tax: What is GST in India? Indirect Tax Law Explained (cleartax.in)
• ICSI Beginners guide on GST, BEGINNERS GUIDE ON GOODS AND SERVICES TAX currection.cdr (icsi.edu)
• https://thegstco.com/blogs
