Question

A shopkeeper in Punjab buys an article at a printed price of ₹ 20,000 from a wholesaler in Delhi. The shopkeeper sells the article to a customer in Punjab at a profit of 25% on the cost price. If the rate of GST is 18%, find:

1. the price of the article (inclusive of GST) for the shopkeeper.
2. the amount of tax, under GST, paid by the shopkeeper to the government.

Answer 1

i. Given: M.P of an article = ₹ 20,000

Profit % = 25%

GST = 18%

Since the transaction is inter-state.

∴ IGST = 18% of ₹ 20,000

= `₹ 18/100 xx 20,000`

= ₹ 3,600

Thus, the C.P of the article (including IGST)

= ₹ 20,000 + ₹ 3,600

= ₹ 23,600

ii. S.P of an article to the customer = ₹ 20,000 + 25% of ₹ 20,000

= `₹ 20,000 + 25/100 xx 20,000`

= ₹ (20,000 + 5,000)

= ₹ 25,000

∴ IGST (output) = 18% of ₹ 25,000

= `₹ 18/100 xx 25,000`

= ₹ 4,500

Thus, the amount of tax under GST paid by the shopkeeper to the Government = Output GST - Input GST

= ₹ (4,500 - 3,600)

= ₹ 900