Example 3. A manufacturer buys raw material worth 4000, paying GST at the rate of
5%. He sells the finished product to a shopkeeper at a profit of 30%. If the rate of GST
for the finished product is 12%, find the tax liability of the manufacturer.
matorial - 7400 rate of GST on raw material = 5%
Answers
Answer:
Step-by-step explanation:
A manufacturer buys raw material worth 4000, paying GST at the rate of 5%.
Cost of raw material = Rs. 4000
GST = 5 % of 4000
= 200
the finished product to a shopkeeper at a profit of 30%
Cost of finished goods = 4000 + 200 + 30 % profit
= 4200 + 1260
= 5460
If the rate of GST for the finished product is 12%,
GST = 12 % of 5460
= 655.2
Tax paid by the manufacturer = 5 % GST + 12 % GST
= 200 + 655.2
= 855.2
Answer:
Value of raw material = ₹ 4000, rate of GST on raw material = 5%
Tax paid by the manufacturer for the raw material
= 5% of ₹ 4000 = ₹ (5/100×4000) = ₹200.
Input GST of the manufacturer = ₹ 200
Profit of the manufacturer = 30% of ₹ 4000
= ₹ (30/100×400) = ₹ 1200
Selling price of the finished product = C.P. + profit
= ₹ 4000 + ₹ 1200 = ₹ 5200
Tax collected by the manufacturer from the shopkeeper for the finished product
= 12% of ₹ 5200
= ₹ (12/100×5200) = ₹ 624
Output GST of manufacturer = ₹ 624.
Tax liability of the manufacturer = Output GST- input GST
= ₹ 624- ₹ 200 = ₹424