Question

A dealer purchased a music system from the manufacturing company for 25000 and sold it to a consumer at a profit of 20%. If the rate of GST is 18%, calculate (i) the amounts of Input CGST and Input SGST for the dealer (ii) the amount of GST payable by dealer to the Governmer. (iii) the amount that the consumer has to pay for the music system [Assume that all transactions take place in the same state]​

Answer 1

Answer:

Step-by-step explanation:

It is given that the price of the music system is Rs. 25000.

The cost price (CP) = Rs. 25000

His percentage profit is 20%. So, the profit will be:

Profit (P) = 20% of CP

  = 20% of 25000

 =20100×25000

  = Rs. 5000

The selling price (SP) of the instrument is the sum of cost price and the profit dealer gained.

SP = CP + P

Substituting the values, we get:

SP = 25000 + 5000

SP = Rs. 3000

The rate of GST is given to be 18%.

i) The CGST and SGST input amounts for the dealer and their rates (R) are equal to half the rate for GST.

⇒R=12×18%⇒R=9%

These taxes are applied on the selling price of the commodity, the amount is given as:

⇒A=9100×30000A=2700

As the amount for both CGST and SGST are equal, we have:

CGST = SGST = A

CGST = SGST = Rs. 2700

Therefore, the amounts of input CGST and input SGST for the dealer are Rs. 2700 each.

ii) GST is the sum of both CGST and SGST

GST = CGST + SGST

GST = 2700 + 2700

GST = Rs. 5400

Therefore, the amount of GST payable by dealer to the Government is Rs. 5400

iii) The amount consumers need to pay is the GST over the selling price.

Amount = SP + GST

Amount = 30000 + 5400

Amount = Rs. 35400

Therefore, the amount that the consumer has to pay for the music system is Rs. 35400

Note: It is given in the question that we have to assume that all transactions take place in the same state because SGST which is for state government might vary from one state to another but in the same state there won’t be any change. Remember that the profit or loss percentage are to be calculated on CP while the rate for taxes are to be calculated on the SP because these taxes are paid by the customers to the government.