Sales tax is a form of indirect tax in India which is applicable on purchase or sale of goods and services within the country. It is an additional amount which is paid over and above the base value of the product being purchased. Sales Tax is levied by the Central Government as well as State Governments. Although it is decided by the central government based on its tax policies, state sales tax laws may vary in different states. You can also calculate the sales tax on a specific product. For this, individuals can avail sales tax calculator online also to easily calculate the same.
How to Calculate Sales Tax?
Sales Tax is calculated on a particular product using a simple formula, given below-
Total Sales Tax = Cost of Item X Sales Tax Rate
The above given formula is simple and can be calculated easily. Although, sellers and manufacturers need to consider the below given conditions while calculating the sales tax on particular products-
- It is always calculated as a percentage
- Be updated as per the sales tax rate of the state and city as it differs from state to state
Also, taxpayers can calculate the sales tax through online sales calculator offered by various domains.
Online Sales Tax Calculator
Various websites are offering online sales calculator for individuals to calculate sales tax. Wherein you need to fill-in the cost of the item and the rate of sales tax. After entering the data, you will get the sales tax calculated within fraction of seconds.
Sales Tax Exemptions
To eliminate the possibility of double taxation, there are certain categories which do not come under the purview of State Sales Tax. Following are the exemption under Sales Tax-
- Particular goods according to the list of goods as exempted by the state government
- Products sold to the educational institutions like schools, colleges and so on or for the purpose of charity
- Products from sellers that come with a valid state resale certificates
Sales Tax Calculator: FAQs
Inter-state sales refer to the transfer of title documents of goods that are moved from one state to state for prime reason of sale.
One can calculate the sales tax using the formula, Sales Tax = Purchase Price X Rate of Sales Tax
No. Sales Tax has been replaced by Goods and Services Tax (GST) starting from July 1, 2017.
There are five different types of Sales Tax in India as mentioned below:
· Wholesale Sales Tax
· Manufacturer’s Sales Tax
· Retail Sales Tax
· Use Tax
· Value Added Tax
Under The Central Sales Tax Act, 1956, Sales Tax is governed. It contains the rule for sales tax laws for the sale and purchase of goods.