Question

A dealer in Delhi buys an article for 16,000 from a wholesaler in Delhi. He sells the article to a customer in U.P. at a profit of 25%. If the rate of GST is 5%, find:

1. the tax under GST paid by the wholesaler to government.
2. the tax under GST paid by the dealer to the government. 
3. the amount which the customer paid for the article.

Answer 1

(i) GST = Rate × Value 

= 0.05 × 16,000

= 800

Profit = 0.25 × 16,000

= 4,000

Selling price = 16,000 + 4,000

= 20,000

Output tax (IGST) = 0.05 × 20,000

= 1,000

(ii) Tax paid by Dealer = Output tax – ITC 

= 1,000 – 800

= 200

(iii) Total Amount = Selling Price + Output Tax

= 20,000 + 1,000

= 21,000