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Question
Shanky buys an article from Krishan for ₹ 10,000 and sells it to Shekh at 10% profit. If the rate of GST is 12%, find the tax liability of Shanky.
Sum
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Solution
Input Tax = Cost Price × GST Rate
= 10,000 × 0.12
= ₹ 1,200
SP = Cost Price + Profit
= 10,000 + (10,000 × 0.10)
= 10,000 + 1,000
= ₹ 11,000
Output Tax = Selling Price × GST Rate
= 11,000 × 0.12
= ₹ 1,320
Tax Liability = Output tax – Input tax credit
= 1,320 – 1,200
= 120
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