Question

A wrist watch was sold by a wholesaler from Mumbai (Maharashtra) to a dealer in Indore (MP) for ₹ 22000. The dealer in Indore sold it to an end-user in Gwalior (MP) at a profit of ₹ 5000. If the rate of GST is 18%, calculate 

1. the net IGST, CGST and SGST payable by the dealer in Indore. 
2. the cost price of the watch for the end-user.

Answer 1

Given:

Wholesaler (Mumbai to Indore) sold at ₹ 22,000.

Dealer in Indore sold to end‑user in Gwalior at a profit of ₹ 5,000.

Rate of GST = 18% (i.e. CGST 9% + SGST 9% for intra‑state sales; IGST 18% for inter‑state purchases).

Step-wise calculation:

1. Tax on dealer’s purchase (inter‑state):

IGST = 18% of ₹ 22,000 

= 0.18 × 22,000

= ₹ 3,960

2. Dealer’s selling price (taxable value)

= Cost + Profit

= ₹ 22,000 + ₹ 5,000 

= ₹ 27,000

3. Tax on dealer’s sale (intra‑state):

CGST = 9% of ₹ 27,000

= ₹ 2,430

SGST = 9% of ₹ 27,000

= ₹ 2,430

Total output GST = ₹ 2,430 + ₹ 2,430

= ₹ 4,860

4. Input credit and set‑off:

Dealer has input IGST credit = ₹ 3,960 from purchase.

IGST credit may be utilized against output CGST and SGST; apply to CGST first:

Offset CGST ₹ 2,430 fully

⇒ Remaining credit = 3,960 – 2,430

= ₹ 1,530

Apply remaining ₹ 1,530 against SGST ₹ 2,430

⇒ SGST payable = 2,430 – 1,530 

= ₹ 900

IGST payable = 0, CGST payable = 0, SGST payable = ₹ 900.

That net GST payable equals GST on the profit: 18% of ₹ 5,000 = ₹ 900.

5. Cost to end‑user = Selling price + GST charged by dealer

= ₹ 27,000 + ₹ 4,860

= ₹ 31,860