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

1. the marked price of the machine.
2. retailers cost price inclusive of GST.
3. the CGST and SGST payable by the wholesaler to the government.

Answer 1

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