GST (Goods and Services Tax) is an indirect tax that has replaced many indirect taxes in India. The GST Act was passed in Parliament on 29th March 2017 and came into effect on 1st July 2017. GST is a comprehensive, multi-stage, destination-based tax that is levied on every value addition.
GST can be calculated using the following formula:
For exclusive GST:
GST Amount = (Original Cost * GST Rate) / 100
Total Amount = Original Cost + GST Amount
For inclusive GST:
GST Amount = Original Cost - (Original Cost / (1 + GST Rate/100))
Base Amount = Original Cost - GST Amount
Example 1 (Exclusive GST):
If the original cost of a product is ₹1000 and the GST rate is 18%, then the GST amount will be ₹180 and the total amount will be ₹1180.
Example 2 (Inclusive GST):
If the total cost of a product is ₹1180 and the GST rate is 18%, then the GST amount included is ₹180 and the base amount will be ₹1000.