A Roadmap Of Math Behind GST

Nowadays the term GST has become common in every household. But initially, we all know that when it was introduced to us by our government, we had to google its full form, what it means, and how it is going to bring a change in our economy. On 1 July 2017, our Prime Minister launched the goods and service tax in our country. But, it was already in the making under the Atal Bihari Vajpayee government. 

GST refers to an indirect tax levied on the supply of goods and services. The sellers add the tax expense on the prices of the product, and thereby the customers have to pay the cost inclusive of tax. There are different kinds of GST - Central GST, State GST, Union Territory GST, and Integrated GST. 

The GST rates in India are 5%, 12%, 18% and 28%. 

The calculation of GST goes like - 

GST Amount = ( Original Cost * GST% ) / 100

Net Price = Original Price + GST Amount

For example, if a product is sold at Rs 2000 and GST give is 18% then the calculation will go like 2000 + ( 2000 * 18/100) = 2360 

The formula to remove GST is - 

GST Amount = Original Cost – [Original Cost x {100/(100+GST%)}]

Net Price = Original Cost – GST Amount.

GST is mainly divided into two parts - State Goods and Services Tax (SGST) which is collected by state governments and Central Goods and Services Tax (CGST) which is collected by the central government. 

There are several benefits of GST as stated or listed by the experts and government officials as it is a revolutionary change in the history of India’s tax system, and this major transition was based on the firm ground of math calculations.