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Question
Ravi buys an article from Qarim for ₹ 20000 and sells it to Rahim at 10% profit. If the rate of GST is 12%, find the tax liability of Ravi.
Sum
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Solution
ITC = 12% of ₹ 20000
= 0.12 × 20000
= ₹ 2400
Profit = 10% of ₹ 20000
= 0.10 × 20000
= ₹ 2000
SP = 20000 + 2000
= 22000
Output Tax = 12% of ₹ 22000
= 0.12 × 22000
= 2640
Tax Liability = Output tax – ITC
= 2640 – 2400
= 240
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