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Reverse calculation of gst on products with two tax rates!

Pushkar Yadav (Student) (44 Points)

01 May 2018

Basic info. Cotton based clothes like women Kurtis have two tax rates, that is, 5% for products upto Rs.1000 and 12% after that.

So now, could you guys please tell me what will be the gst rate applicable on the products with MRP between 1050-1120. I'm confused!

Let's assume we have a product with a MRP of Rs.1100. Reverse calculating are giving me conflicting results.

If we tax at 12%. 1100/1.12 gives us us the ex-gst price of Rs.982 which falls under the 5% category but if we tax this product at 5% we will have the MRP of only Rs.1031.

Hoping to have a solution soon!!

TIA and Regards.

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4 Replies

Henry Vakharwala (155 Points)
Replied 01 May 2018

calculate tax on your selling price - cost price+your profit...

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Shivam Chomal (498 Points)
Replied 01 May 2018

GST is charged on amount at which you are selling and it has no relation with MRP of the goods. So, if you want to calculate GST on such items you will have to check the price at which it was offered(i.e by invoice). If it has price below Rs.1000 add 5% if above Rs. 1000 then 12%. In such situations you cannot go for back calculation based on MRP.

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Pankaj Rawat (GST Practitioner) (55052 Points)
Replied 01 May 2018

Yes agrre to Mr. shivam ji...., its ur sale price on which the limit of 1000/- below or above .

Pushkar Yadav (Student) (44 Points)
Replied 03 May 2018

I got the got the answer.

If the MRP was between 1050-1120, I should merely lower it and charge the lower tax rate, which is 5%. This way the customer will have to pay a bit less amount for the product.

Thank you.