How Does Goods and Services Tax (GST) Work

How Does Goods and Services Tax (GST) Work

Anas Bouargane 01/11/2019 3

When we purchase products, we pay a price that includes sales tax as well. GST (General Sales Tax is applied on all products that are purchased for daily consumption. As consumers, we should know about how GST is charged and why we are paying a certain sum as tax. Most people do not know anything in this relation. GST rules depend on the country you are living in which as they vary from one location to the other. For instance, in the United Kingdom, there are specific regulations for application of GST. It is important to have complete awareness so that you know what you are being charged for.

4 Reasons to use a GST calculator

Online calculators make life simple. Why do you need to spend an hour on calculating GST when you can do it in few minutes through a tool? Here are 4 reasons why a calculator should be used to determine sales tax.

  • Corrections not needed

The calculation of GST is not like adding two numbers. Various complex formulae are involved when you are determining this value. For most people, it is not easy to remember these formulae and use them in a proper manner. Thus, using a Prepostseo GST calculator is a much better option. It is a cumbersome process to spend time on performing the calculations and then recheck the answers. Manual methods do not work well when you wish to calculate GST without making errors.

  • No compromises on correctness and accuracy

It is very much obvious that technical tools do not make mistakes like humans. Once you have entered the GST inputs and outputs have been produced, nothing has to be rechecked. Manual calculation methods always have the risk of mistakes. At times, users even fail to identify them. Even people with exemplary financial knowledge make errors so taking chances is not a sign of intelligence. Other than that, if you simply want to determine the tax amount being paid, there is no need to understand financial formulae and calculate the sum manually. Using the tool is an easier option that consumes a smaller time frame.

  • GST calculators are very simple to use

Do GST calculators have a hard to use set of features? The answer to this question is no. The set of user features are very simple and anyone can use them. At times, users do have apprehensions about whether they would be able to use a tool easily or not. These tools are very easy so using them is not a problem even if you have basic technical skills.

  • These tools are used online with minimal effort

Online tools make life immensely easy because no time is spent on preparing an installation platform. Secondly, there are no restrictions on the number of devices you can use the tool on. Installations can prove to be quite tough at times. In some cases, users have to configure the files and then run them on the required device. With no or minimal technological capabilities, this is nothing less than climbing a mountain. GST calculators are mostly used online. If you have a computer, tablet or smartphone with active network connectivity, it would be immensely simple to calculate the GST accurately.

Understanding the Steps of GST Calculator Usage

Unlike a lot of other calculation tools, a list of inputs does not have to be entered by the user for calculating GST. Here is how you can get the job done easily by using an online tool.

  • Enter the product net price and GST percentage

The percentage of GST is calculated on a particular figure which is the product price. Consider that you wish to calculate the GST on a product that actually costs 1000. Thus, 1000 would be entered as the product price. Similarly, GST calculation tools have a proper text box for GST percentage. We can take the GST percentage as 25%. Hence, once you have entered these values in the respective boxes, click the “calculate” button to see the value of sales tax. According to these values, the value of GST would be 250. Along with that, the gross price would be 1250 as it is calculated by adding tax amount and product price.

  • No need to apply formulae

Only financial experts are able to determine the value of GST without using a calculator. Someone who does not have adequate knowledge would end up in difficulties. Using an online GST calculator means that you can calculate the tax percentage even if you do not have financial knowledge.  It is a fact that a lot of people aiming to calculate GST do not have core domain knowledge. Consider that you are a normal consumer who wishes to determine the GST percentage on a particular product. For you, it would not be important to understand the process of calculating percentages. Other than that, the only thing important for you would be the specific percentage applied. Using a GST calculator means spending no time on learning any GST formula.

Conclusion

The calculation of GST is not that simple after all. If you are not using a calculator to do the job, it would be much harder to get the correct tax values. Time is also a problematic factor in this case. Using a calculator means you would get done with all the steps within few minutes. The time needed to complete all the calculations manually would be much longer. This time frame increases mainly because people do not have enough financial knowledge. Hence, they require more time to determine the GST.

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  • Nikki Hitchen

    Interesting article

  • Lee Graham

    Simple & effective, thanks !

  • Dick Wright

    Good post

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Anas Bouargane

Business Expert

Anas is the founder of CEF Académie, a platform that provides guidance and support for those willing to study in France. He previously interned at AlphaSense. Anas holds a bachelor degree in applied economics from the University Paris Sud.

   

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