Gst with examples

gst-1-e1434030754841.jpg

GST India – Goods & Service Tax

What is GST?

GST is a consumption based tax levied on sale, manufacture and consumption on goods & services at a national level. This tax will be substitute for all indirect tax levied by state and central government. Exports and direct tax like income tax, corporate tax and capital gain tax will not be affected by GST. GST would apply to all goods other than crude petroleum, motor spirit, diesel, aviation turbine fuel and natural gas. It would apply to all services barring a few to be specified. With the increase of international trade in services, GST has become a global standard. The proposed tax system will take the form of “dual GST” which is concurrently levied by central and state government. This will comprise of:

  • Central GST (CGST) which will be levied by Centre
  • State GST (SGST) Which will be levied by State
  • Integrated GST (IGST) – which will be levied by Central Government on inter-State supply of goods and services.

Many taxes has been subsumed under GST which are as under

Central Indirect Taxes & Levies Central Excise Duty
Additional Excise Duties
Excise Duty levied under the Medicinal Preparations (Excise Duties) Act, 1955
Service Tax
Additional Customs Duty (CVD)
Special Additional Duty of Customs
Central Surcharge and Cess
State Indirect Taxes & Levies VAT / Sales Tax
Entertainment tax (other than the tax levied by local bodies)
Central Sales Tax
Octroi and Entry Tax
Purchase Tax
Luxury Tax
Taxes on Lottery
Betting and Gambling
State Cesses and Surcharges

 

Who will pocket taxes?

  • For Intra State Transactions: In case of Intra State transactions, Seller collects both CGST & SGST from the buyer and CGST needs to be deposited with Central Govt. and SGST with State Govt.
  • For Inter State Transactions: Integrated Goods and Service Tax (IGST) shall be levied on Inter State transactions of goods and services which are based on destination principle. Tax gets transferred to Importing state. More over it is proposed to levy an additional tax on supply of goods, not exceeding one percent, in the course of inter-state trade or commerce, to be collected by the Central Govt. for a period of two years, and assign to the States where the supply originates. Valuation of stock transfers to be determined. Exports and Supplies to SEZ units will be zero rated.

 

How to adjust the Credit?

Setoff of IGST, CGST & SGST will be as follows in the below mentioned chronological order only.

Credit of To be Adjusted with
IGST 1)   IGST
2)   CGST
3)   SGST
CGST 1)   CGST
2)   IGST
SGST 1)   SGST
2)   IGST

 

What impact GST will have on pricing of products as compared to current scenario?

Let us take an EXAMPLE to understand this clearly.

Capture

 

In the above example, you can note that the tax paid on sale within state can be claim against tax paid on sale outside state in GST system, which is not in present tax system.

The credit of CGST cannot be taken against SGST and credit of SGST cannot be taken against CGST but both credits can be taken against IGST.

 

ENROLLMENT & REGISTRATION:

  • NSDL has been appointed to incubate the GST Portal and develop its functionality. NSDL has created a pilot portal known as “GST Pilot Portal”
  • Here, every tax payer will be issued a 15 digit common identification number which will be called as “Goods & Service Tax Identification Number” (GSTIN) a PAN based number.
  • Online application form for dealers will be available to provide their details and upload documents.
  • Registration includes basic steps like register themselves on the Enrolment page, and then Login using the given “User ID” and “password”, filling the application form by uploading the requisite documents related to excise, Service Tax, IEC, CIN, Professional Tax number, Shops & Establishment Number and any other state specific registration numbers, contact numbers, postal address & E-mail address of business entity, bank account details including MICR code, place of business, details of goods & services, scanned signed photographs.

Like, every coin has two sides, even this concept of GST has its own positives and negatives, we leave on the reader to decide for them the impact of GST whether on micro or macro level.

 

Positive Aspects

  1. The main reason to implement GST is to abolish the cascading effect on tax. A product on which excise duty is paid can also be liable for VAT. Suppose a product A is manufactured in a factory. As soon as it releases from factory, excise duty has to be paid to central government. When that product A is sold in same state then VAT has to be paid to state government. Also no credit on excise duty paid can be taken against output VAT. This is termed as cascading effect since double tax is levied on same product.
  2. The GST is being introduced to create a common market across states, not only to avoid enfeebled effect of indirect tax but also to improve tax compliance.
  3. GST will lead a more transparent and neutral manner to raise revenue.
  4. Price reduction as credit of input tax is available against output tax.
  5. Simplified and cost saving system as procedural cost reduces due to uniform accounting for all types of taxes. Only three accounts; CGST, SGST, IGST have to be maintained.
  6. GST is structured to simplify the current indirect system. It is a long term strategy leading to a higher output, more employment opportunities, and economic boom.
  7. GST is beneficial for both economy and corporations. The reduced tax burden on companies will reduce production cost making exporters more competitive.

Negative Aspects

  1. GST is being referred as a single taxation system but in reality it is a dual tax in which state and centre both collects separate tax on a single transaction of sale and service.
  2. At present the main Indirect tax system of central Government is central excise. All the goods and commodities are not covered by the central excise and further there is an exemption limit of Rs. 1.50 Crores in the central excise and further traders are not liable to pay central excise. The central excise is payable up to the stage of Manufacturing but now GST is payable up to the stage of sale.
  3. Majority of dealers are not covered with the central excise but are only paying VAT in the state. Now all the Vat dealers will be required to pay “Central Goods and service tax”.
  4. The calculation of RNR (Revenue Neutral Rate) is very difficult and further Govt. wants to enhance its revenue hence rate of Tax will be a problem. As per the News reports the proposed rate for State GST is 12% and Central GST is 14% Plus Govt. wants to impose 1% CST at the initial stage of GST on the interstate sale of Goods and services. So the normal rate of overall tax will be 26%. This rate is very high comparing to the fact that small and medium Industries are at present not covered by the central excise and most of the Goods such as agricultural products are out of the preview of the Central Excise.
  5. Improvement in the Manufacturing and distribution of Goods and service, increase in exports, various reforms, check on corruption, less Government control are some of the factors which are responsible for the economic growth of the country. A tax system can make a revolution in the economy of the country is “rarest of the rare” thing.

Source: Finmart.com

Share this post

119 Replies to “Gst with examples”

  1. Yugal says:

    Your example is wrong, Bcoz in GST case you are showing that cost in nag to Chan is 1100 which.is 1000 Bcoz cgst and sgst will not add cost.

  2. s k pradhan says:

    Yes you are right.

  3. Vijaya kumar says:

    The high increase in service tax is not covered at all which is at present 15%

  4. chockalingam says:

    pl.ref GST

  5. Kaialsh Bucha says:

    I pur. goods for Rs. 1000/- From Local Market, The said Goods Sold to A out state Party after addition of My profit 20%, What Calculation Should Come For GST ( Proposed GST Rate 18%)

    1. Anonymous says:

      GST=0.18(1200-1000)=36

    2. Ankur Chaudhari says:

      In Local Purchase @1000 – CGST n SGST will be applicable @9% = Total tax 180 = GRN or Bill Value 1180
      In Intra-state Sales @1200 – IGST will be applicable @18% = Total Tax = 216 = Invoice Value 1416
      IGST will be adjusted against IGST / SGST / CGST
      Hence Tax liability = 216-180 = 36

      1. SHARAN CHHABRA says:

        YOU ARE WRONG ,IGST IS APPLICABLE ON INTER STATE SALES NOT ON INTRA STATE SALES,INTRA STATE SALES MEANS SALES WITHIN THE SAME STATE AND IN SAME STATE SALES SGST AND CGST IS APPLICABLE NOT IGST

      2. Hemanshu Desai says:

        Since I am selling to end user, he will pay Rs.1,416/-, right?
        Earlier in VAT (CST case, assuming 12.5% tax), my invoice to him would have been Rs.1,200/- plus 12.5% = Rs.1,350/-
        Where is the end user cost coming down?
        Its only possible when (and because of inter state CST was not set off), On my purchase of Rs.1,000/- I would pay 12.5% tax hence my cost will be Rs.1,125/-. Now I will add 20% of my profit, base price becomes Rs.1,350/-. I now charge 12.5% CST so my invoice to end user will be Rs.1,518.75. In this case the cost will certainly come down. BUT remember there was something called FORM C under which CST was much less.

    3. Danish says:

      Goods value = 1000
      Tax 18% = 180
      Profit 20%= 200
      Total value of cost with tax and your profit is = 1380
      But when you sale your products out of state then you have to pay 10 % igst on total value of goods including profit with 18% tax means 138
      Now you can adjust the igst with cgst , sgst
      Like cgst – sgst – igsr
      180 – 138 = 42 rupees tax you have to pay now finally

  6. Raj says:

    i’m a manufacturer of plastic mould components, if i purchase laptop [ which is not part of raw material used in the manufacturing ] for Rs.10000 + IGST (10% say) Rs.1000 = Rs.11000 , can this IGST (say 10%) can be taken in the Input Tax, since i have paid some tax… will the burden of paying Double tax will be avoided….

  7. shine says:

    No , Input TAX CREDIT IS AVAILABLE ONLY FOR PURCHASE OF GOODS FOR RESALE

  8. Jayanti Shah says:

    I think ITC on Capital goods (Laptop) purchased for Business (Word used “Capital Good used in Business” not only used in Production) can be available, if used partly or fully for Business. Ration may be applied if it is used partly for business. IGST can be adjusted with any part of GST..

  9. R.R.NAIK says:

    OUR IS ONE OF THE EDUCATIONAL TRUST
    AN ALL INDIA EDUCATIONAL INSTITUTE
    WE ARE CONDUCTING COURSES WHICH IS APPROVED BY THE GOVT. OF INDIA
    ALSO SOME COURSES FOR CORPORATE ENTITY FOR THIS WE HAVE REGISTRATION OF SERVICE TAX
    REGISTERED UNDER THE BOMBAY PUBLIC TRUST ACT 1950.
    IS GST REGISTRATION IS REQUIRED,

  10. KISHAN says:

    YOUR EXAMPLE WRONG BECAUSE CST ONLY 2%

  11. sk fazal says:

    By whom is GST taxed
    reply fast I have to write in exam

  12. Sandesh.M says:

    In both the cases cost of the product will be same i.e 2310. because when nagpur sells it to chennai he sells it with the tax of 10% on 2100 ie. 210. he wont deduct the tax already paid . Only when nagpur person file Returns he will the deduct the CREDIT .

  13. Saurav Mallick says:

    Hi All,

    Can someone please help me in understanding how GST is calculated

    A company based in Chennai is selling sunglasses to its dealers. The base price is 14000 INR and the freight charges borne by the company and which recoverable is 1000 from the customer and the company is giving a discount a 10%.

    Please let me know how the customer is going to pay to the company. The customer can be based in Chennai or West Bengal.

  14. Raj says:

    Cost of Sun Glasses INR 14,000+Freight Charges 1,000 Less 10% Discount = Amount Liable for GST

    1. Ra says:

      Will the freight on to pay basis or to be billed at Chennai basis be added to calculate GST?

  15. Sundeep Ahuja says:

    Medicines should be kept out of GST as pharmacist has got lot of skilled job like to dispense correct medicines. He will give medicines or keep on filing GST thrice a month. Keep it simpler for us. Its a request.

  16. Rajeeva Patavardhan says:

    Hi Sir,
    Just I wanted to know what price difference can I get after GST implementation on two wheeler. Whether to buy before Implementation or not?

  17. Prajakta K Sonar says:

    Dear sir I am in manufacturing small engineering turned parts,my buisiness is new,it has been started in January-2017, I am manufacturing goods on labour charges as well as with material also as per partys requirement, My question is
    1) shall I register my buisiness under GST.
    2) If yes on what basis, I dont know my turover will cross 10 lsks or not.
    3) If no How can I take with material Jobs, because raw material provider will take GST from Me.

  18. Abhishek says:

    Can we do manual billing??
    Or computerised billing is compulsory?

  19. seshadri says:

    I have big doubt in case of billing. I am a dealer, say for CCTV . I have business in Chennai . We have three columns of tax in invoice. right ? CGST , SGST & IGST.

    Scenario 1 : i am going to invoice to END CUSTOMER in chennai.. what is to be FILLED IN THE THREE COLUMNS OF INVOICE FORMAT GIVEN BY MoF.?

    Scenario 2 : i am going to invoice to END CUSTOMER in Andhra . what is to be FILLED IN THE THREE COLUMNS OF INVOICE FORMAT GIVEN BY MoF ?

    Please help by clarifying this.

    Best Regards

    sesh

  20. A N SURESH says:

    Sir,

    Kindly educate me as to how Government Turnkey contracts for drinking water supply, where in the pipes and fittings used for drinking water projects of outer dia of above 100 mm are exempted from excise duty levy. To avail this, a winning contractor needs to apply for certificate of exemption through the respective Government Engineer, to the respective Dy.Commissioner to avail this exemption.

    Now in the GST effective from 1/7/2017, how this will be done???

    Regards,

    A N SURESH

  21. kevel katkani says:

    your answer is wrong because you added CGST & SGST as cost

  22. Shah vinod T. says:

    Interstate purchase,total purchase and sales is below 20-Lakh,sales only in importing state, is their composit Gst scheme applicable.

  23. Hassan says:

    Is there any ratio in adjusting CGST and SGST while invoicing ?

  24. Archana says:

    i am bag maker . i purchase cloth 10 mtrs of 100 Rs but i use approximately 4 mtrs cloth and bags sale in other satate what is the calculation of GST

  25. Vishal says:

    I purchase goods from Auction from APMC, through commission agent. Rs. 100 is the price in auction. I get an invoice from my commission agent like this. 100 + (1% commission) = 101 + (2.5% SGST & 2.5% CGST) = Rs.106.05. Now add my manufacturing cost + profit Rs. 23 = 129.05. That is the sale price. So invoice would be 129.05 + (2.5% SGST & 2.5% CGST) = Rs. 135.50. So what is Input Tax here? What is my Input Tax Credit? And what is final Tax payable? Pleae explain.

  26. Santosh Kumar Mahakud says:

    Sir,
    I have a question that GST Rate are 5%, 12%, 18% & 28%, then in case of INTRA-STATE sale the percentage of CGST & SGST will be as below or not,
    % of GST CGST SGST
    5% : 2.5% 2.5%
    12% : 6% 6%
    18% : 9% 9%
    28% : 14% 14%

    And on the invoice we will charge 01st IGST (In case of Inter State Sale), CGST (In case of Intra State Sale) & then SGST (In case of Intra State Sale).
    And what GST is used for SGST in ODISHA like WBGST in West Bengal.

    Please relpy.

  27. M.Jawahar says:

    Sorry, your example very wrong and very poor. No one commodity have rate of 10% in CST.
    Bills at Restaurant will be more with GST. For instance, on the off chance that you were accustomed to spending Rs 100 on eating out, then there is VAT and service tax of 18.5%, on an average. So separated from the service tax, you would for the most part spend Rs 118.50. It is normal that the GST rate will be settled at around 18-20% which is higher than the 18.5% we spend aggregately under various duty heads. Along these lines, be prepared to pay more while eating out!
    Currently the service tax on mobile bills is 15%. That is to say, on each Rs 100 charge, you need to pay Rs 15 as tax. On the off chance that GST comes in at the normal 18-20%, then mobile bills will go up.
    In the event that you are wanting to purchase jewelry, it is advisable to purchase it before the GST administration comes into spot. This is on the grounds that, as of now, just a 2% tax is payed by the shoppers however once the GST model is set up, no less than 6% successful tax rates could be forced, affecting your jewelry purchases.

  28. satyen says:

    if gst rate is 5% what will be gst rate for igst, cgst and sgst?

  29. YOGESH KUMAR LOHAR says:

    HY WE ARE A SOFTWARE COMPANY & WE NEED TO KNOW FOR THE GST STRUCTURE FOR HOSPITAL MANAGEMENT SOFTWARE FOR OUR CLIENT LIKE- HOSPITAL, PHARMACY, SO CAN ANY BODY EXPLAIN THE SAME THAT WHAT CALCULATION WILL APPLICATION FOR PHARMACY & HOSPITAL SYSTEMS?

  30. saravana kumar m says:

    were to use sgst , cgst and igst ????

    1. Admin says:

      IGST = SGST + CGST , Mostly, IGST is used where SGST + CGST is not applicable. Hope it helps. Thanks

    2. Avinash Kollipara says:

      The sgst & cgst under the IGST.
      may i think…!

  31. Mani says:

    Dear Sir,
    I have difficulties to register for GST, because our company name is contain bracket “(India)”?. Any advise?

  32. J K Agrawal says:

    I provide service under “Renting of non-residential property” in Odisha. I have rented out a premise to a company who has GSTIN of Maharashtra but premise is rented out here in odisha. Shall I apply IGST in invoice or SGST and CGST?

  33. Tirtha Jyoti Bhaduri says:

    Dear Sir,
    We are a Small Distributor for Lab-Chemicals. in Kolkata.
    Please tell me whether I am correct , or not.
    We have some CST Paid Biochemicals ( HSCN Code= 38020011).
    Example A: If the Product Price is Rs. 1000/-
    Case 1: Intra State Sale ( Local) —–Bill Will be : Taxable Product Price = Rs. 1000/- + (SGCT @ 18% )180 >> Total Bill= Rs. 1180/- and I have to pay SGST ( Only) to Govt. @ 18% = Rs. 180/-
    Case 2 : Inter State Sale …..Taxable Product Price = Rs. 1000/- + ( CGST @ 9%) 90 + ( IGST @9%) 90 >> Total Bill= Rs. 1180/- and I have to pay to Govt. Rs. 90 as CGST & Rs. 90 as IGST.

    Eample B : Intra State Purchase( from Dealer) : Taxable Product Price = Rs. 1000/-
    Then ,
    Case 3>> Bill = Rs1000 + (IGST @ 9%) Rs 90 + (CGST @ 9% ) Rs. 90 = Total Purchase Value = Rs. 1180/- Or ,
    Case 4 >> Bill = Rs1000 + (CGST @ 18% ) Rs. 180 = Total Purchase Value = Rs. 1180/- …. Which one will be Correct ??

    And if I sale that Purchased product locally with 20% Profit then ( 1) What will be the Bill Format and ( 2) what Tax I have to get Credit and (3) what Tax I have to pay.
    Please explain with Example .
    Best regards,

  34. Avinash Kollipara says:

    here we can go for movie tickets.

    before gst the movie ticket will be 100.
    and after gst the movie ticket will be 150.
    theres is a lot of differece between the before and after gst

  35. Sonu says:

    I am a chemist in delhi region and i have a turnover of less than 20 lakhs. i am not under GST criterion,but one thing i want to clarify that how would i make my bills to customer,like previously making or is there any difference in that for making bills.I am in doubt to include taxes in bills or not,whats the procedure can anyone plz helpmeout

    1. Sudalaiadvocate says:

      No doubt, you need not pay tax on your sales till it reaches Rs 20 Lakhs. you should issue Bill of supply instead of tax invoice. There would be no difference on your case before GST and after GST except the tax portion. your bill of supply should not contain tax portion.

      1. Admin says:

        Thanks for the reply !!

  36. santosh says:

    i am trader of steel , regd in Chhattisgarh, i want to purchase material from mumbai and also sale in mumbai . is it possible in GST ????

  37. Sagar says:

    Other than mistakes already noted by others…One more rectification is necessary…Credit of Input VAT is available against Output CST liability in present scenario. But you didn’t consider that in given situation.

  38. M.Shanmuga sundaram says:

    im plastic hanger manufacturing . for our product the purchaing raw material gst is 18% .for hanger product need to know the gst . im suppling hanger for export company in local areas & i need to know the HSCODE for the hanger product.

  39. SAM SUNDAR says:

    Please Help,
    I am a manufacturer of Insulating materials, if I want to sell my product in different state to END USER how to charge GST 18% (SGST/CGST/IGST) ?????

  40. SUDARSHAN SAHOO says:

    OUR TRADING COMPANY

    PURCHASE IGST-3000
    PURCHASE CGST -2000
    PURCHASE SGST-2000

    SALE IGST -1500
    SALE CGST-4000
    SALE SGST-4000

    HOW TO ADJUST GST

  41. Rajalakshmi S.Nair says:

    I am a house wife, not know much about the GSt/Igst etc., The problem we are now facing is each and every items we purchase from retail shop is levied by Get.including the water which we purchase for ₹25/- the vegitable, the rickshaw, any food from small hotels. So for normal people like us penalised due to GST. Where as the income what we get also TDS. is cut. Please clarify.

Leave a Reply

Your email address will not be published.

Solve this and then Post comment * Time limit is exhausted. Please reload CAPTCHA.

scroll to top
badge