What is GST?
Goods and Services Tax or GST is considered to be same or similar to Value Added Tax or VAT. Hence, the definition of GST would be similar or same. GST is the tax being imposed on services and goods on each phase of the chain of distribution. As an illustration, let me state that the factory or manufacturer would be adding it when the product is being sold it to a wholesaler. Wholesaler would be adding it when it would be selling to a retailer, however, it could get the initial amount refunded. Hence, in this level, the tax which is added would only be applied to the net price difference between the wholesaler and the manufacturer. Such a similar rule is being applied in each of the next level of transaction. There would be only a single exemption wherein the end consumer would not be able to have the tax refunded. This is because he would be the last in this distribution chain.
How GST Is Calculated?
- Determining the net price (this is the price without including GST). Let us keep it as $50.
- Finding the rate of GST. In our example, it would be 10%. In case it is stated in percentages, one needs to divide it by 100. So it is 10 / 100 = 0.1.
- For calculating the amount of the tax: multiplication of the net price by the rate of GST. $50 * 0.1 = $5.
- For deciding the gross price: multiplication of the net price by the rate of GST (we would again receive $5) rate.
- Finally, add it to the price which is exclusive of VAT. $50 + $5 = $55.
Our GST Calculator
The GST calculator of ours would be calculating the GST amount which is being included in a gross price and the amount which need to be added to a net price.