HOW TO CALCULATE GST

Step 1: Find the GST Rate Applicable for the Goods or Service
a. Find HSN Code or SAC Code- Make a distinction between the type of supply supplied, i.e., is
it a good or service?
If the supply is a good, then verify the HSN Code applicable to the Good. HSN Code is an
international system for classifying all types of goods in international transactions.
If the supply is a service, then the concerned individual shall verify the SAC Code. SAC Code
stands for Service Accounting Codes and is used for classifying all the services under GST.
b. Determine the GST Rate applicable for the HSN or SAC Code- Once the HSN or SAC Code
is determined for the supply, then the GST Rate for the HSN Code or SAC code is determined.
GST is levied under 5 different slab rates at NIL, 5%, 12%, 18% and 28% for both goods and
services.
Step 2: Determine the Applicability of IGST or CGST and SGST
To determine if IGST or CGST and SGST would be applicable, the individuals should have to
determine the place of supply.
The place of supply of goods or services generally is the address where the goods were delivered
or the service was provided.
a. Inter-State Supply- If goods or services are provided between two states, i.e., from one state to
another, then IGST would be applicable on the transaction.
b. Intra-State Supply- If the individual provides the goods or service within the same state, then-
1) CGST or Central Goods and Services Tax and SGST or 2) State Goods and Service Tax
would be applicable.
Calculating IGST, CGST and SGST
IGST- IGST is applied at the total GST rate.
IGST= GST Amount calculated
CGST and SGST- The total GST is divided into CGST and SGST/UTGST.
CGST and SGST is usually half of the GST Amount calculated.
CGST= GST Amount/ 2 SGST= GST Amount/2
GST Calculation Formula
GST Amount = ( Original Cost * GST% ) / 100
GST %= The GST rate applicable
The different slabs for GST are 5%, 12%, 18% and 28%.
Net Price = Original Cost + GST Amount
Step 3: Determine if GST is Chargeable on Reverse Charge Basis
Normally under GST, the supplier of the goods or service is liable to collect tax from the
recipient and remit the same with the Government.
However, the recipient shall become liable if the services provided to the user notified as reverse
charge services.
Reverse Charge Services-
DETERMINE THE TYPE OF TRANSACTION FOR AVAILING INPUT TAX CREDIT
Transactions can be broadly specified under the following three categories:
 Business to Business,
 For Business to Consumer – Value of supply more than Rs.2.5 lakh,
 Business to Consumer – Value of supply less than Rs.2.5 lakh.
For B2B and made available for GST input tax credit, both the supplier and the recipient of the
goods or service must have a GSTIN. GSTIN is provided when a business obtains GST
registration.
In a B2C transaction under GST, the recipient of the goods or service would not be eligible for
receiving the input tax credit.
What is ITC?
Input Tax Credit refers to the tax already paid by a person at time of purchase of goods or
services and which is available as deduction from tax payable.
ITC value can be reduced from the GST payable on the sales by the taxable person only after
fulfilling some conditions.
How is it used for offsetting the liability?
Amount of Input Tax Credit on account of IGST shall first be utilized for the payment of IGST
then for payment of CGST and then for payment of SGST or UTGST.
Amount of Input Tax Credit on account of CGST shall first be utilized for the payment of CGST
then for payment of IGST. Such an amount cannot be used for payment of SGST or UTGST.
Amount of Input Tax Credit on account of SGST or UTGST shall first be utilized for the
payment of SGST or UTGST then for payment of IGST. Such an amount cannot be used for
payment of CGST.
Note- Input tax credit of SGST/UTGST will be calculated state-wise i.e ITC of SGST in one
state cannot be utilized for payment of SGST of another state.
ITC can be availed by whom?
1. All registered person are allowed to take input tax credit other than person who are
paying tax under composition scheme.
2. A person who has applied for registration within 30 days from the date on which he is
liable for registration in respect of inputs held in stock and inputs contained in semi-
finished or finished goods held in stock on the day immediately preceding the date from
which he becomes liable to pay tax.
3. A person who hasn’t taken voluntary registration in respect of inputs held in stock and
inputs contained in semi-finished or finished goods held in stock on the day immediately
preceding the date of grant of registration.

GST evasion
Fake invoices- Fake invoices basically mean issuance of an invoice without any underlying
supply of goods or services.
Short payment of tax by undervaluing taxable goods and services- refers to the practice of
deliberately assigning a lower value than the actual market value to items or services subject to
taxation. Undervaluation can take various forms, such as understating the price of goods,
inflating expenses, or manipulating financial records to deceive tax authorities.
Wrong availment of exemption notifications- When someone wrongfully avails an exemption
notification, it means they are claiming tax benefits or relief that they do not qualify for. Tax
exemption notifications are specific provisions or notifications issued by tax authorities that
grant certain individuals, entities, or transactions relief from paying taxes on particular incomes,
goods, or services. This could involve misinterpreting eligibility criteria, misrepresenting facts,
or engaging in fraudulent activities to gain unwarranted tax advantages.
Wrong availment of the input tax credit- Where a business or taxpayer incorrectly claims credit
for the taxes they paid on their inputs or purchases. ITC is the tax that a business pays on a
purchase and that it can use to reduce its tax liability when it makes a sale.
Non-payment of tax on supply of taxable goods and services-
Input tax credit-
E-Way bill used for tax evasion
Difference between Civil money recovery suit S. 420 IPC

To prove the case against the accused U/S 420 IPC, the prosecution was required to prove that
there was dishonest or fraudulent intention of the accused at the time of making the promise. In
Vimla Vs Delhi Administration, AIR 1963 SC 1572, the Hon'ble Supreme Court observed that
the expression "defraud" involves two elements,namely, deceit and injury to the person
deceived.
State vs . Sat Pal And Others https://indiankanoon.org/doc/158925345/

REGISTERING OF FIR
Cognizable offence- A police officer has the authority to make an arrest without a warrant.
If a victim approaches the police to register an FIR, the police may do so u/s 154(1) of the CrPC.
If the police of a particular police station refused to register an FIR, the victim can approach the
higher police officer such as the SP, DCP, Commissioner, etc [Section 154(2) CrPC]. If these
efforts go futile then it can approach the Magistrate to direct the police to file the FIR and
investigate the case.
The magistrate can either take cognizance u/s 190 (1) (a) or order a police officer to register the
FIR of such a cognizable offence and investigate u/s 156(3) and 200.
Direct the police to file an FIR for investigation by taking cognisance-
S. 190 of the CrPC- empowers the Magistrate to take cognizance of cases on the report by police
or from a person other than the police. ‘Cognizance’ means "to take judicial notice” to start the
proceedings.
Under section 190 the Magistrate can take cognisance under the following three conditions:-
1. receiving a complaint from any person other than a police officer
2. upon his own knowledge
3. upon receiving a complaint of fact which constitutes a cognizance offence
The Magistrate can u/s 156(3) of the CrPC direct the police authority to file an FIR in the
following scenarios-
1. If the police officer has not registered the FIR.
2. If the Superintendent of Police (SP) has not registered the FIR.
3. If the FIR is registered but, the proper investigation has not been done.
For using the power u/s 156(3) of the CrPC three preconditions has to be fulfilled as laid down
by the Hon’ble SC in Alok Kumar Harsh Mander & Anr (2023:DHC:5045)-
1) Disclosure of cognizable offence
2) Application of judicial mind
3) Necessity to pass speaking order.
https://www.verdictum.in/court-updates/high-courts/pre-conditions-must-be-satisfied-when-
directing-registration-of-fir-under-section-156-3-crpc-delhi-high-court-1486067
Here in S. 153 (3) Magistrate connotes the magistrate authorised by Section 190 of the CrPC.
The words “‘any Magistrate” refer to the judicial magistrate who is competent to take cognizance
of a cognizable offence and not the executive magistrate. The Executive magistrate can’t direct
the investigation of a cognizable offence.
Section 200 of the CrPC-
If the magistrate has already taken the complaint under cognizance u/s 200 of the CrPC it cannot
be ordered for 156(3).
When the magistrate passed orders under section 156(3), he did so without knowing the case.
According to section 200 of the Criminal Procedure Code, the judge will issue an order after
learning about the case.
This knowledge created a material difference between the judge's order under section 156(3) and
the s 200 CrPC.
Once the magistrate knows this, he cannot step back and disrupt the investigation.
When a magistrate acquires jurisdiction under section 200 of the Criminal Procedure Code, he
must be convinced that all of the elements of the crime have been committed.
In the event that he has reasonable doubt that a crime has been committed, he may issue an order
under section 202 CRPC rather than invoking section 156(3) CRPC. The magistrate may request
a preliminary inquiry by a police officer under Section 202 of the Criminal Procedure Code. The
magistrate may dismiss the complaint if the results of the preliminary inquiry demonstrate that
there is no evidence of an offence.