Question

Which expression gives the net GST payable by a registered dealer?

Options

• \[ \text{GST Payable} = \text{Input GST (ITC)} - \text{Output GST} \]

• \[ \text{GST Payable} = \text{Output GST} \times \text{Input GST (ITC)} \]

• \[ \text{GST Payable} = \text{Output GST} - \text{Input GST (ITC)} \]

• \[ \text{GST Payable} = \text{Output GST} + \text{Input GST (ITC)} \]

Answer 1

Net GST payable is calculated as \[ \text{GST Payable} = \text{Output GST} - \text{Input GST (ITC)} \]. Each dealer pays only the tax on the value added at that stage, because the tax paid on purchases is claimed as ITC.