G.S.T( Goods and Services Tax)

 Before 1 July 2017, We have VAT ( Value Added Tax) system. But After 1 July 2017 we have a new Tax System called G.S.T( Goods and services tax ).Because our page is purely dedicated to Mathematics so, we only talk about Mathematics behind the term G.S.T. Here I am not going deep conversation of G.S.T that this system is good or bad? More clearly , Today we only discuss how to calculate G.S.T. Before going Mathematically, Here I am giving some terminology which is needed to understand G.S.T and its concept. "One Nation one tax" this is the main theme behind  concept of G.S.T. Some basic terminology are as follows:-

1) There are three types of G.S.T 

          (a) C.G.S.T ( Central Goods and Services Tax)

          (b) S.G.S.T ( State Goods and Services Tax) 

          (c) I.G.S.T( Integrated Goods and Services Tax)

2) Intra  State Transactions:- 

When the location of the supplier and the place of supply are in the same state then this type of transactions are called Intra State Transaction.

2) Inter State Transactions:- 

when the location of the supplier and the place of supply are not in the same state then this type of transactions are called Inter State Transaction.

Here is some concepts related to calculation of G.S.T.

   (I)  When there is a intra state transactions the Tax is equally divided between the state government and central government.

  ( II) When there is a inter state transactions then I.G.S.T is calculated and this Tax is collected by central government and the central government decide how to distribute this tax between the states.

  (III) When we calculate C.G.S.T and S.G.S.T in intra state transactions the tax is equals to half of the G.S.T.

 

After all these background, let start some interesting Mathematics.

Firstly , To be honest if you know how to calculate percentage then you definitely able to understand the concepts and also calculate G.S.T easily but if.........................

 

We understand G.S.T by some examples because there is no formula in calculation of G.S.T.

Q.) Find the amount of bill of the intra state transaction of good of cost 250 and G.S.T is 12%. 

Ans: In this question it is clearly mentioned that the transaction is intra state.We have to calculate C.G.S.T and S.G.S.T.we also known that C.G.S.T and S.G.S.T  is equal to half of G.S.T 

      i.e., C.G.S.T=S.G.S.T = (G.S.T)/2 = 6% 

now you known better than me what we have to do next .

           S.G.S.T = 250*6/100=15

  and C.G.S.T= 15

so, total bill =250+15+15=280.

Second type of G.S.T calculation is when a whole seller B take some goods from manufacturer A and whole seller give it to consumer or a small shopkeeper C .

 

In this type of transaction first G.S.T is calculated when A sell to B and second G.S.T is calculated when B sell to C .But now Question is, What amount of G.S.T is paid by B?

Simply, B is to pay

              G.S.T =( G.S.T collected at second transaction) - (G.S.T paid at first transaction)

This is because when A buys goods from the manufacturer, he paid G.S.T and when he sell this item to C ,he again paid a G.S.T collect from C. which is  not seems fair. So, he paid 

    G.S.T =( G.S.T collected at the time of selling ) - ( G.S.T paid at the time of buy).

Now after reading the above discussion you definitely talk about G.S.T with anyone with no fear and also you are able to calculate G.S.T. And one more thing if you know  the basic mathematics of class 8th you definitely able to calculate the G.S.T. 

Thank you

S.K Ojha