Output GST and Input GST are two concepts that are relevant in the context of GST (Goods and Services Tax) in India. Let me explain both of them with an example:
Output GST:
Output GST is the tax that a registered taxpayer charges on the supplies of goods and services to their customers. The taxpayer is liable to collect and deposit this tax amount with the government. The output GST is calculated as a percentage of the value of the goods or services supplied.
For example,
let’s say a company ABC sells goods worth Rs. 10,000 to a customer. If the applicable GST rate is 18%, then the output GST amount charged by ABC on this sale will be Rs. 1,800 (18% of Rs. 10,000). This Rs. 1,800 will be collected by ABC from the customer and deposited with the government as output GST.
Input GST:
Input GST is the tax that a registered taxpayer pays on the purchases of goods and services used for their business. The taxpayer can claim input GST credit for the tax paid on such purchases, which can be used to offset the output GST liability. Input GST is calculated as a percentage of the value of the goods or services purchased.
For example,
let’s say a company ABC purchases raw materials worth Rs. 5,000 from a supplier. If the applicable GST rate is 18%, then the input GST amount paid by ABC on this purchase will be Rs. 900 (18% of Rs. 5,000). This Rs. 900 can be claimed as input GST credit by ABC and used to offset their output GST liability.
In summary, Output GST is the tax charged by a registered taxpayer on the supplies of goods and services, whereas Input GST is the tax paid by a registered taxpayer on the purchases of goods and services. The Input GST can be claimed as a credit against the Output GST liability.
