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Question
A manufacturer buys raw material for ₹ 25000, paying GST at the rate of 5%. He sells the product formed to a shopkeeper at a profit of 20%. The rate of GST for the products formed is 18%, find the tax liability of the manufacturer.
Sum
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Solution
ITC = `25000xx5/100`
= 1250
Profit = `25000xx20/100`
= 5000
Selling price = 25000 + 5000
= 30000
Output tax = `30000xx18/100`
= 5400
Tax Liability = Output tax – ITC
= 5400 – 1250
= 4150
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