‘Tax’ is the way by which the Government/State collects revenue. And just like many other countries, the US has also adopted the GST system. Most of you would be familiar with GST and why you need to pay GST. But in case you have no idea what this is and why you need to pay this? Or you just want to know how to calculate the GST on your own, then this article is all you need.
This article is divided into 4 parts so that we could explain the concept of GST and how you could calculate using Prepostseo GST calculator better to you. By the end of this article, you would be able to calculate GST on your own quite easily.
GST – A Brief Introduction
GST or Goods and Service Tax is a type of indirect tax that is levied on the consumption of goods. In other words, GST is also known as General Sales Tax or Simple Sales Tax. As it is an indirect tax that is collected by the end consumers on the consumption of products (goods).
The manufacturers added included the sales tax value that is calculated as per the rate specified by the local tax authorities into the price of the product and collects the amount from end consumers. Then they submit the amount of sales tax to the board of revenue.
Who Should Register For GST?
We know that GST is collected from the end consumers on the consumption of products. And it is not possible to collect GST individually from customers as there are thousands of them. Therefore, the responsibility lied in the business, manufacture of entity selling the products and services to the customers. Hence any person, entity or business organization that is engaged in selling goods and services to the consumers must register them for GST.
How Much GST You Pay In the US?
Every country or state that collects GST from its people uses certain specific slab rates (tax percentage). Each country has a different slab rate for the GST collection on goods and services. Similarly, US tax authorities have specified their own tax rates. The tax authorities or tax councils revise slab rates almost every year.
This might create confusion for the people, especially for the new entrepreneurs and businessmen. But you need not worry as we have enlisted the current GST slab rates which are used in the US in 2019.
– Standard GST: Unlike other countries such as Pakistan or India, the US doesn’t have a national sales tax/GST tax rate. It means that there is no Standard GST rate in the US.
– State Level GST: Though the US Government doesn’t use a general or standard GST rate, each state in the US has its own sales tax rate. In simple words, in the US, GST is collected on the basis of the State-level tax rate rather than a standard tax rate. The state-level GST rates range from 2.9% to 7.5%.
– Additional GST: there are 35 states in the US, where the local government imposes an additional sales tax or GST at the rate from 1% to 5%. It means that if in some state of the US, the general state GST rate is 7.5%, the net GST would be collected at a rate of 7.5% + 1% = 8.5%. This example is used just to explain to you the concept of additional sales tax imposed in some states pf the US.
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As the GST varies in the US, hence most of the people face difficulties in calculating their GST. Which is why you should use a GST calculator to estimate the GST.
How Often GST Is Collected?
Unlike the income tax the sales tax return or GST returns could be filled:
– Annually
– Semi-Annually
– quarterly
– Monthly
– Semi-monthly.
The frequency or duration of sales tax returns is specified by the State’s Local Government in the US. all the registered persons must file sales tax returns on time as specified by their state.
How To Calculate The GST?
It is quite important for any entity or business to file its sales tax returns on time as per the rules and regulations imposed by the US State Government. Otherwise, in case of non-compliance, the person or entity would b liable to a penalty and it would impact the reputation of the business as well.
To make sure you submit your tax returns on time without any problem, you must use the GST Calculator. Prepostseo GST Calculator has the following features:
– Saves your time and money.
– Prevents the risk of errors.
– Calculates accurate GST as per the information.
– Very easy and simple software to use.
Why Should You Pay GST in the US?
One of the major reasons to implement the GST system in the economy was to reduce the personal income taxes/direct taxes on the person. But why do you need to pay GST? We have enlisted some of the reasons which make it compulsory for the businesses or other registered persons to pay the GST in full amount.
– If a business/entity/organization or any other person wants to stay compliant, it is a must to pay the GST.
– GST is imposed in the system to reduce the burden on income tax on individuals. Hence it is a major source to generate revenue for Government.
– With GST and other taxes, the government runs the state and its expenditure.
– Due to GST, the government is able to help the lower-income people and facilitate them.
– When a business/entity/organization regularly pays off its GST, it makes the entity more reliable and reputable. It attracts more customers as well as more investors. And an entity that pays its taxes regularly receives loans more easily rather than an entity which dies not pay taxes.
– GST is implemented to create uniformity among the taxpayers/consumers. Whether you have a high-income range or low-income range, GST is the same for everyone.
In short, GST is one of the integral factors to keep your business compliant with the laws and regulations. Hence it is important to calculate your GST carefully and accurately. And the best and easiest way to do is via the GST calculator. All you have to add the amount inclusive of the GST and it will calculate the GST amount! Calculating GST was never this easy before!