GST calculation in production costs
Yes, GST calculation in production costs is included in production costs as it is a tax on the value added during the production process. When calculating the production costs, the GST paid on the purchase of raw materials, labour, and other overhead expenses can be included in the cost of goods sold (COGS).
For example, if the cost of raw materials is Rs. 10,000 and the GST rate is 18%, then the GST paid on the raw materials would be Rs. 1,800. The total cost of the raw materials including GST would be Rs. 11,800. Similarly, the GST paid on labour and other overhead expenses can also be included in the COGS.
For more information, visit this site:https://www.gst.gov.in/
The formula for calculating COGS is:
COGS = Beginning inventory + Purchases during the period – Ending inventory
The GST paid on purchases during the period can be included in the Purchases part of the formula.
