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Question
A wholesaler buys a machine from the manufacturer for ₹ 25000. He marks the price of the machine 20% above his cost price and sells it to a retailer at 10% discount on the marked price. If the rate of GST is 18% and assuming that all transactions occur within the same state, calculate
- the marked price of the machine.
- retailers cost price inclusive of GST.
- the CGST and SGST payable by the wholesaler to the government.
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Solution
Given:
Wholesaler’s cost price = ₹ 25,000.
Mark-up = 20% on cost.
Retailer gets 10% discount on the marked price.
GST = 18% (intra‑state ⇒ CGST 9% + SGST 9%).
Step-wise calculation:
1. Marked price (MP)
MP = `₹ 25,000 × (1 + 20/100)`
= ₹ 25,000 × 1.20
= ₹ 30,000
2. Selling price to retailer (taxable value)
`SP = MP × (1 - 10/100)`
= ₹ 30,000 × 0.90
= ₹ 27,000
3. GST on the sale (18% of taxable value)
Total GST = 18% of ₹ 27,000
= 0.18 × 27,000
= ₹ 4,860
Split into CGST and SGST (equal halves):
CGST = 9% of ₹ 27,000
= 0.09 × 27,000
= ₹ 2,430
SGST = 9% of ₹ 27,000
= ₹ 2,430
4. Retailer’s cost inclusive of GST
= Taxable price + Total GST
= ₹ 27,000 + ₹ 4,860
= ₹ 31,860
