Question

A dealer purchased a music system from the manufacturing company for ₹ 25,000 and sold it to a consumer in the same city at a profit of 20%. If the rate of GST is 18%, then:

1. the amount of input CGST for the dealer is:
   1. ₹ 2250 
   2. ₹ 4500 
   3. ₹ 5000 
   4. nil
2. the amount of GST payable by the dealer to the government is:
   1. ₹ 2250 
   2. ₹ 900 
   3. ₹ 450 
   4. nil
3. the amount that the consumer has to pay for the music system is:
   1. ₹ 30,000 
   2. ₹ 32,700 
   3. ₹ 35,400 
   4. ₹ 36,000

Answer 1

Given:

Cost Price (CP) for the dealer = ₹ 25,000

GST rate = 18%

All transactions occur within the same state, so CGST and SGST are applicable.

CGST rate = SGST rate

= `"GST rate"/2`

= `(18%)/2`

= 9%

The dealer makes a 20% profit while selling to consumer.

Selling Price (excluding GST) = ₹ 25,000 + 20% of ₹ 25,000

= `₹ 25000 + 20/100 + 25000`

= ₹ 25,000 + ₹ 5,000

= ₹ 30,000

i. For dealer:

On purchase price of ₹ 25,000.

Input CGST = 9% of ₹ 25,000

= `9/100 xx 25000`

= ₹ 2,250

Input SGST = 9% of ₹ 25,000

= `9/100 xx 25000`

= ₹ 2,250

Hence, for dealer input CGST = Input SGST = ₹ 2,250.

ii. Total input GST = ₹ 2,250 + ₹ 2,250 = ₹ 4,500.

Output GST (on dealer’s sale)

On selling price of ₹ 30,000.

Output CGST = 9% of ₹ 30,000

= `9/100 xx 30000`

=  ₹ 2,700

Output SGST = 9% of ₹ 30,000

= `9/100 xx 30000`

=  ₹ 2,700

Total output GST = ₹ 2,700 + ₹ 2,700

= ₹ 5,400

GST payable by dealer to government = Output GST – Input GST

= ₹ 5,400 – ₹ 4,500

= ₹ 900

Hence, GST payable by dealer to the government = ₹ 900.

iii. Cost price for consumer = ₹ 30,000

GST for consumer = GST charged by dealer = ₹ 5,400

Total = ₹ 30,000 + ₹ 5,400

= ₹ 35,400

Hence, amount consumer pays for the music system = ₹ 35,400.