Question

A person X in U.P. buys a carpet at marked price of ₹ 5000 from a wholesaler Y in Delhi. X sells the carpet to a consumer Z in M.P. at a profit of 20% on the marked price. If the rate of GST is 12%, find:

1. the price of the carpet inclusive of tax (under GST) at which X bought it.
2. the amount of tax (under GST) paid by X to government.
3. the amount of tax (under GST) received by Delhi government.
4. the amount of tax (under GST) received by Central government.
5. the amount which the Z pays for the carpet.

Answer 1

i. Marked Price = ₹ 5000

IGST paid by X = 12% of 5,000 

= `12/100 xx 5,000`

= ₹ 600

Price paid by X inclusive of tax = 5,000 + 600

= ₹ 5,600

Profit = 20% of 5,000 

= `20/100 xx 5000`

= ₹ 1,000

Selling Price for X = 5,000 + 1,000

= ₹ 6,000

ii. Net tax = Output tax – Input tax 

= 720 – 600

= ₹ 120

iii. Tax received by Delhi Government = ₹ 0

iv. IGST collected by X (Output tax) = 12% of 6,000

= `12/100 xx 6,000`

= ₹ 720

v. Total price = SP for X + IGST 

= 6,000 + 720

= ₹ 6,720