Question

Let A, B and C be three dealers in a GST chain.
A buys some goods/services for 2,000 and sells
it to B at a profit of 1200. Taking the rate of GST
as 18%, find:
(i) Input-tax payable by dealer A.
(ii) Input-tax payable by dealer B.
(iii) Total cost price for dealer C, if he is the end
user.
(iv) Output GST for dealer C (the end-user).
​

Answer 1

i) Rs. 360

ii) Rs. 576

iii) Rs. 3776

iv) Rs. 0.00

Step-by-step explanation:

Given that,

For the case of dealer A,

Cost Price = Rs. 2,000

i). Input tax paid by dealer A = Tax he paid on purchase

18% of 2000

= 18/100 * 2000

= Rs. 360

Profit made = Rs. 1200

S.P. = Rs. 2000 + Rs. 1200

= Rs. 3200

ii). Input-tax payable by dealer B = Tax he paid on the purchase

= 18% of 3200

= 18/100 * 3200

= Rs. 576

Assuming that he sells the goods without any profit.

S.P. = C.P. + Input tax

= Rs. 3200 + 576

= Rs. 3,776

iii) Total Cost Price for dealer C = Rs. 3,776

iv). Output GST for dealer C would be = Rs. 0.00

since he is the end-user and he doesn't resell the goods.

Learn more: Output GST

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