What is Input Tax Credit ? (ITC)
GST is levied and collected at every stage of trading from manufacturer to consumer. When trader pays GST at the time of purchase, it is called 'Input tax' and he collects GST at the time of sale which is called 'Output tax'.At the time of paying GST to the government a trader deducts the input tax from the output tax and pays the remaining tax. This deduction of input tax is called Input Tax Credit.
GST payable = Output tax - ITC
In short, while paying taxes to the government each trader in the trading chain subtracts the tax paid at the time of purchase from the tax collected at the time of sale and pays the remaining tax.
Smita has invested Rs. 12,000 to purchase shares of FV Rs.10 at a premium of Rs.2. Find the number of shares she purchased. Complete the given activity to get the answer.
Activity : FV = Rs. 10, Premium = Rs. 2
∴ MV = FV + = + 2 = 12
`therefore "No. of .shares" ="total investment"/"MV" = square/12 = square "shares"`
A wholesaler purchased electric goods for the taxable amount of Rs 1,50,000. He sold it to the retailer for the taxable amount of Rs 1,80,000. Retailer sold it to the customer for the taxable amount of Rs 2,20,000. Rate of GST is 18%. Show the computation of GST in tax invoices of sales. Also find the payable CGST and payable SGST for wholesaler and retailer.
Smt. Malhotra purchased solar panels for the taxable value of Rs. 85,000. She sold them for Rs. 90,000. The rate of GST is 5%. Find the ITC of Smt. Malhotra. What is the amount of GST payable by her?