Reverse GST Calculator

The Reverse GST mechanism is a process where a recipient becomes liable to pay tax on the goods and services, unlike the general case where a supplier has to bear the payment. Under this mechanism, the Government imposes the burden of making the tax payments on a recipient to exempt a few specific classes of suppliers. 

When it comes to bearing the tax burden, a recipient can use a Reverse GST calculator to obtain clarity on the cost of a product or service. Keep reading to learn more about this tool.

What is a Reverse GST Calculator?

Reverse GST Calculator is a mathematical-based financial tool that determines the bill amount of goods and services, excluding tax. This tool helps in figuring out the pre-tax cost on the basis of the GST-inclusive amount and an applicable GST slab rate.

How Does Reverse GST Calculator Work?

A Reverse GST calculator computes the GST exclusive price using a formula and the variable inputs set by an individual regarding the post-cost price and the current goods and services tax rate. To know how this tool works, you first need to understand the Reverse GST calculation formula.

Formula to Calculate Reverse GST with Example

To determine the Reverse GST value, you need to calculate the amount of Base Price or the amount exclusive of GST. This can be done by using the formula given below.

Base Price = GST Inclusive Amount * 100 / (100 + Value of an applicable GST Rate)

Once you have the base price, you can further calculate the Reverse GST amount by subtracting it from the GST-inclusive amount.

Therefore, Reverse GST = GST Inclusive Amount - Base Price

Let’s understand this GST reverse calculation formula with an example.

For instance, you bought a product at ₹1,180 which is its manufacturing cost including the GST amount applicable at a rate of 18%.

Here, GST inclusive amount = ₹1,180 and GST rate value = 18%. 

By putting these values into this formula, we can calculate its manufacturing cost excluding the GST amount or the base price.

Base Price = ₹[1,180 × 100 / (100 + 18)] = ₹1,000.

Hence, if we exclude the GST value, the manufacturing cost of your product stands at  ₹1,000.

How to Use a Reverse GST Calculator?

Here is a stepwise guide on how to use a Reverse GST calculator.

Step 1: In a prescribed box in the calculator, enter the amount inclusive of the applicable GST.

Step 3: Among all available options, choose the appropriate goods and services tax slab/rate that applies in your case.

Step 4: Click on the ‘Calculate’ tab.

In case you do not find the 'Calculate' tab, a Reverse GST calculator will automatically determine the base price, which is an amount exclusive of the GST amount. It will further display the total GST amount, along with a breakdown in separate CGST and SGST sections.

Advantages of Using GST Reverse Calculator

Here is a list of some of the common advantages of using a Reverse GST calculator.

• Useful for cost-breakdown analysis, this calculator helps individuals to identify different variables associated with the total price of a product or service, such as GST inclusive and exclusive amounts.




• By assessing an accurate amount of GST payment, this calculator helps you to plan your finances accordingly.




• Once you have figured out your GST-exclusive amount, you will gain a resourceful insight into a product/service which you can thereafter use for making informed purchasing decisions.




• A manual calculation of the GST amount might not be fully transparent and involve human errors. On the other hand, a GST reverse calculator is an automated tool that eliminates all scope of making such errors and ensures fair pricing.




• You can easily access this financial tool online, free of cost. It can be used as many times as you might need, throughout the day.

Conclusion

Considering that now you know everything about a Reverse GST calculator, you can easily determine the tax and the pre-tax amount of your desired goods and services. Before using this tool, make sure to identify the GST slab that applies to you and verify its prevailing rate.