Question

Shanky buys an article from Krishan for ₹ 10,000 and sells it to Shekh at 10% profit. If the rate of GST is 12%, find the tax liability of Shanky. 

Answer 1

Input Tax = Cost Price × GST Rate

= 10,000 × 0.12 

= ₹ 1,200

SP = Cost Price + Profit

= 10,000 + (10,000 × 0.10)

= 10,000 + 1,000

= ₹ 11,000

Output Tax = Selling Price × GST Rate

= 11,000 × 0.12

= ₹ 1,320

Tax Liability = Output tax – Input tax credit

= 1,320 – 1,200 

= 120