Q1: What is GST and how is it calculated?
GST (Goods and Services Tax) is a value-added tax levied on most goods and services. It's calculated as a percentage of the base price. Formula: GST Amount = Base Amount × (GST Rate / 100). The total price includes both the base amount and GST.
Q2: What is the difference between GST and VAT?
GST (Goods and Services Tax) and VAT (Value Added Tax) are similar consumption taxes, but terminology varies by country. India uses GST, while many European countries use VAT. Both are calculated the same way - as a percentage of the product or service price.
Q3: What are common GST/VAT rates?
GST/VAT rates vary by country and product type. Common rates include: 5%, 10%, 12%, 15%, 18%, and 20%. Some items may be exempt (0%) or have reduced rates. Always check your local tax authority for current rates applicable to your purchase.
Q4: How do I calculate GST if the price already includes it?
If the price includes GST, you can extract it using: GST Amount = Total Price × (GST Rate / (100 + GST Rate)). For example, if total is $118 with 18% GST: GST = $118 × (18/118) = $18.
Q5: Do I need to pay GST on all purchases?
GST/VAT applies to most goods and services, but exemptions exist for essentials like basic food items, medical services, education, and exports. Some countries have different rates for different product categories. Check local regulations for specifics.
Q6: Can businesses claim GST/VAT back?
Yes, registered businesses can typically claim GST/VAT input tax credits (ITC) on purchases used for business purposes. This allows businesses to recover GST paid on inputs, preventing double taxation. Individual consumers cannot claim GST back.