Find GST on purchases is important to know what GST is. GST stands for Goods and Services Tax. It is a tax added to products and services you buy.
Buying goods or services is part of daily life. But do you know how to find the GST on purchases? It may sound tricky, but it’s easier than you think. In this blog, we’ll explain it in a simple way. You don’t need to be an expert. Whether you’re a student, a shopkeeper, or just someone curious, this guide will help you step by step.
Let’s jump in and understand how GST works on purchases!
What Is GST and Why Does It Matter?
Before we learn how to find GST on purchases, it’s important to know what GST is. GST stands for Goods and Services Tax. It is a tax added to products and services you buy. Every time you purchase something, a part of the price is GST.
For example, if you buy a smartphone, the bill shows the price of the phone and the GST separately. Knowing how much GST you pay helps you track expenses and claim tax credits if you’re running a business.
Now, let’s move ahead and see how to calculate it.
How to Find GST on Purchases Step by Step
Finding GST on purchases is simple when you follow these steps.
Step 1 – Look at the Invoice Carefully
Every time you buy something from a registered business, you will get a bill or invoice. This bill shows:
The item price
The GST rate applied
The total amount including GST
Check if the invoice clearly mentions “GST” or “CGST/SGST/IGST.”
Step 2 – Identify the GST Rate
GST rates differ depending on the item. Some items have a 5% GST rate, others 12%, 18%, or even 28%. Usually, the invoice will mention the applicable rate.
For example, if you buy office supplies worth ₹1,000 and the invoice shows 18% GST, this means the GST is ₹180.
Step 3 – Use the Formula to Find GST Amount
If the invoice doesn’t clearly show the GST, you can calculate it yourself.
Here’s the formula:
GST Amount = (Purchase Price × GST Rate) ÷ 100
For example:
If you bought something for ₹5,000 and the GST rate is 12%:
GST = (5,000 × 12) ÷ 100 = 60,000 ÷ 100 = ₹600
So, the GST you paid is ₹600.
Step 4 – Find GST When Total Amount Is Known
Sometimes, invoices only show the total amount (including GST), not the base price. In such cases, you can use this formula:
GST Amount = Total Amount × [GST Rate ÷ (100 + GST Rate)]
For example:
Total amount = ₹1,180
GST rate = 18%
GST = 1,180 × (18 ÷ 118) = 1,180 × 0.1525 ≈ ₹180
So, the GST is ₹180.
This method helps you find GST when it’s not separately shown.
Common GST Types You May See on Purchases
When learning how to find GST on purchases, you may see different types of taxes:
CGST (Central GST): Tax collected by the central government.
SGST (State GST): Tax collected by the state government.
IGST (Integrated GST): Tax applied when you buy goods from another state.
All these are part of the total GST, but the invoice will break them down based on your location.
Why It’s Important to Know GST on Purchases
You may wonder, “Why should I care about GST on purchases?” Well, here are some reasons:
For Businesses: You can claim Input Tax Credit (ITC). This helps you reduce your tax liability.
For Personal Use: It helps you understand how much you are paying in taxes.
For Budgeting: You can better plan expenses by knowing the tax amount.
For Transparency: It ensures you are not overcharged.
Understanding GST also helps you spot errors on invoices.
Tools to Help You Calculate GST Easily
Although you can calculate GST manually, there are tools that make it faster:
Online GST Calculators: Enter the price and rate, and it will show you the GST amount instantly.
Mobile Apps: Many apps allow you to scan invoices and calculate GST on purchases.
Spreadsheets: Excel or Google Sheets can be set up with formulas to calculate GST quickly.
These tools are great for business owners, accountants, and even students learning finance.
How to Verify the GST Number on Purchases
Sometimes, you need to check if the seller is a valid GST-registered business. The invoice will show the seller’s GST number.
Here’s how you verify it:
Visit the official GST portal.
Enter the GST number in the search box.
See if the business is registered.
If it’s not registered, you should be careful before buying from them.
What Happens if GST Is Not Shown?
If the invoice doesn’t show GST, ask the seller. All businesses above the taxable limit must charge GST. If they don’t, it may be wrong or illegal.
Always request a proper invoice to ensure transparency.
FAQs: How to Find GST on Purchases
Q1 – Can I calculate GST if I only know the total price?
Yes! You can use the formula: Total × [GST ÷ (100 + GST)].
Q2 – What if the invoice doesn’t show the rate?
Check the type of item you bought. Then look up the GST rate in the official schedule.
Q3 – Can I claim GST if I don’t have an invoice?
No. You must have a valid invoice to claim Input Tax Credit.
Q4 – Is GST included in the price or added later?
It depends. Some businesses show it separately, while others include it in the total price.
A Quick Example for Practice
Let’s say you bought office furniture worth ₹20,000 and the GST rate is 18%.
Step 1: Find GST
GST = (20,000 × 18) ÷ 100 = 3,600
Step 2: Find total amount
Total = 20,000 + 3,600 = ₹23,600
Now you know how much GST you paid!
Final Thoughts
Learning how to find GST on purchases is not hard. It’s all about looking at the invoice, knowing the rate, and using the right formula. Once you get used to it, you’ll find it very helpful for managing expenses and taxes.
Always keep your bills, double-check the GST rate, and don’t hesitate to ask questions. With this knowledge, you’ll be smarter in your purchases and more confident handling taxes.
Start practicing today and make GST work for you!
Our other related articles :
1.What documents are required to claim GST on purchases?
2.Why do GST rates vary between states?
3.Why should consumers be aware of GST on purchases?
4. Where can I find GST rates for specific products?
5.How to calculate GST on purchases?