Finance
GST basics for a small business
Most GST errors on small invoices are arithmetic, not law. These are the ones worth getting right.
By the CALQEVA editorial team1 min read
One tax, collected two ways
When a supply stays within a state, the total GST is split equally into central GST and state GST. When it crosses state lines, the same total is charged as integrated GST. The buyer pays the same amount either way; the split only affects how the invoice is written and how credit flows.
Removing GST from an inclusive price
This is the calculation most often done wrong. To find the base price inside a GST-inclusive total, divide by (100 + rate) and multiply by 100. For an 18% rate on ₹1,180, the base is ₹1,000 and the GST is ₹180.
Subtracting 18% of ₹1,180 gives ₹967.60, which is wrong and will not reconcile with your returns. The difference is small on one invoice and significant across a year.
Discounts and GST
A discount agreed at the time of supply and shown on the invoice reduces the taxable value, so GST is charged on the discounted amount. Discounts given afterwards follow stricter conditions before they can reduce the taxable value. Record the discount on the invoice itself wherever possible.
Keep the rate current
GST rates are set by the GST Council and revised periodically, and the slab structure itself has changed since GST was introduced. Confirm the current rate for your HSN or SAC code rather than relying on a figure you remember from an earlier year.
Try it with your own numbers
Keep reading
- Old or new tax regime: which one fits youThe new regime has lower rates, the old one has deductions. Here is how to work out which leaves you with more, using your own numbers.
- Five percentage mistakes that cost real moneyStacked discounts, percentage points, reversing a rise, and the other percentage errors that show up in shopping, salary and investment decisions.