How to Calculate Reverse GST?

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GST reverse calculation formula with example

. Calculating reverse GST, also known as reverse charge mechanism (RCM), is a procedure wherein the liability to pay tax rests on the recipient of the goods or services instead of the supplier.

How to Reverse Calculate GST?

Reverse charge mechanism is applicable under certain circumstances as specified by the Indian Goods and Services Tax (GST) laws.

Here's a step-by-step guide to calculating reverse GST:

• The first step is to determine whether the transaction falls under the reverse charge mechanism. Reverse charge is typically applicable in scenarios where the supplier is unregistered, or for specific goods or services notified by the government.

• If the transaction falls under reverse charge, identify the taxable supplies for which reverse charge is applicable. These supplies could include specified goods or services as per GST regulations.

• Identify the applicable GST rate for the goods or services under reverse charge. The GST rates vary based on the nature of goods or services.

• Determine the taxable value of the goods or services. This is the value on which GST will be calculated. It may include the transaction value or other factors as specified by GST laws.

• Multiply the taxable value by the applicable GST rate to calculate the GST amount payable under reverse charge.

• Maintain proper records of reverse charge transactions, including invoices, payment vouchers, and GST calculations. Compliance with record-keeping requirements is essential under GST laws.

• The recipient of the goods or services liable under reverse charge mechanism is required to pay the GST directly to the government. This payment is typically made through the GST portal using Form GSTR-3B or other applicable forms.

• Recipients paying GST under reverse charge mechanism are eligible to claim input tax credit on the GST paid, subject to compliance with GST rules and regulations. 

In India, the Goods and Services Tax (GST) is added to the base price of goods and services. To reverse calculate the base price from a GST-inclusive amount, you can use the reverse GST calculator formula:

Base Price= (GST-inclusive Amount)/(1+GST Rate/100)

This reverse calculation of GST formula helps in determining the original price before GST was added.

Here’s a step-by-step explanation:

1. Identify the GST-inclusive amount: This is the total price including GST.

2. Determine the GST rate: The GST rate applicable to the goods or services.

3. Apply the formula: Divide the GST-inclusive amount by 1+GST Rate/100

This is all about how to calculate reverse GST amount.

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As of my knowledge, there is no specific "reverse GST calculation formula" in India. However, I believe you might be referring to the concept of the Reverse Charge Mechanism (RCM).

"Reverse GST" is not a standard term in the context of Goods and Services Tax (GST) in India. If you are referring to the process of calculating the reverse charge mechanism (RCM) under GST, here's an explanation:

The liability to pay GST is on the recipient of the goods or services instead of the supplier. It is known as the Reverse Charge Mechanism (RCM). It applies to specific goods and services as specified by the GST Council.

• Determine whether the goods or services you are dealing with fall under the RCM category.

• Identify the applicable GST rate for the goods or services falling under RCM.

• Calculate the GST amount on the taxable value using the applicable GST rate.

• The recipient of the goods or services is required to pay the calculated GST amount directly to the government.

This is all about the

GST reverse calculation formula

.

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GST itself is a very hard topic and it cannot be understood in a single day. Goods and Service tax is levied upon almost everything and people got mostly acquainted with it after seeing the GST in food bill. I too did not understand GST much and honestly never tried to know about it as well until my uncle approached my father for help to pay about Rs 10,000 as GST. He wanted to know about the reverse GST calculator so that he could calculate whether the amount levied was fair enough or not. I know many of you do not know what it even means so let me answer what is reverse GST first.

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My uncle has a garment business and he buys goods from some suppliers and sells them through his shops. Usually suppliers pay the GST but in some cases, the recipient needs to pay the GST and that is why it is termed as reverse GST.

As per section 9(4) of the GST Act, if  a registered person purchases goods and services from a dealer who is unregistered, then the  buyer has to pay the GST on a reverse charge basis.

How to do reverse calculation of GST?

People are too lazy to calculate the GST themselves and usually pay whatever they are asked to at times. You will get reverse GST calculator India online on searching but learn the formula and get it yourself easily.

GST = Taxable amount * GST Rate

The GST rate differs from one goods or services to others so try to know the applicable GST beforehand.

Suppose the GST including amount is Rs 15000 ad GST rate is 15%

Then the GST excluding amount is 

15000 *(15/100*15000)= Rs1500

Now for reverse GST the calculation is same

Suppose you have purchased goods worth Rs 5000 from a person and are required to pay reverse GST. You have to pay (5,000*18%)= Rs 900

This is

how to calculate Reverse GST.

If you are asked to pay reverse GST always calculate the amount yourself first. You will not require a reverse GST calculator if you follow this formula