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Question
A retailer buys an article at its listed price from a wholesaler and sells it to a consumer in the same state after marking up the price by 20%. The list price of the article is 2500 and the rate of GST is 12%. What is the tax liability of the retailer to the central government?
Options
₹ 0
₹ 15
₹ 30
₹ 60
MCQ
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Solution
₹ 30
Explanation:
Purchase price = ₹ 2,500.
GST @12% on purchase = 0.12 × 2,500 = ₹ 300
⇒ CGST = ₹ 150, SGST = ₹ 150.
Selling price after 20% markup = 2,500 × 1.20 = ₹ 3,000.
GST @12% on sale = 0.12 × 3,000 = ₹ 360
⇒ CGST = ₹ 180, SGST = ₹ 180.
Retailer claims input credit of CGST ₹ 150 against output CGST ₹ 180.
So, net CGST payable to the central government = 180 – 150 = ₹ 30.
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