Formula to arrive at tax value when price is inclusive of tax

Formula to arrive at tax value when price is inclusive of tax

Product version:

6.5 Update 6 or 6.6


Problem Statement:

Formula to arrive at tax value when price is inclusive of tax

Proposed Solution:


The tax value calculation when price is inclusive of GST is:

Tax amount = Value inclusive of tax X tax rate ÷ (100+ tax rate)

Let us discuss few examples to understand this:

Mr. Ram in Karnataka supplies a television to Mr. Shyam in Maharashtra. The television’s price inclusive of GST is Rs. 50,000. Mr. Ram wants to arrive at the value of tax.Here, GST rate applicable to television is 18%. Since this is an interstate supply, type of tax applicable is IGST.

Let us arrive at the value of IGST in this case: 

Value inclusive of tax= Rs. 50,000 

Tax rate= 18 

Hence, IGST amount= 50,000*18/118= Rs. 7627


Steps if any:

NA


Constraints/Scenarios:

NA