Goods & Services Tax — Exercise 1(B)

Under G.S.T. 'value addition' refers to :

1. cost plus tax plus profit

2. cost plus tax

3. expense plus profit

4. tax plus profit

Answer

Under G.S.T. 'value addition' refers to expense plus profit.

Hence, Option 3 is the correct option.

If the rate of GST is 18%, the IGST for an inter-state sale is:

1. 9%

2. 18%

3. 6%

4. 12%

Answer

Option 2 is the correct option.

Reason

In the case of inter-state sale, rate of GST = rate of IGST

⇒ IGST = 18%

Hence, the IGST for an inter-state sale = 18%.

If a dealer supplies goods worth ₹ 3,000 to another local dealer with 28% GST, then the tax levied under CGST is:

1. ₹ 270

2. ₹ 540

3. ₹ 840

4. ₹ 420

Answer

Option 4 is the correct option.

Reason

Cost of goods = ₹ 3,000

GST rate = 28%

Since, it is a local (intra-state) supply, the GST is equally divided between CGST and SGST.

CSGT = SGST = $\dfrac{GST}{2} = \dfrac{28}{2}$% = 14%

The tax levied under CGST = 14% of ₹ 3,000

= $\dfrac{14}{100} \times 3,000$

= 14 x 30 = ₹ 420

Hence, the tax levied under CGST = ₹ 420.

For a registered dealer, if the input tax is ₹ x and output tax is ₹ y, then the tax liability on the dealer is:

1. ₹ x

2. ₹ (x - y)

3. ₹(y - x)

4. ₹ y

Answer

Option 3 is the correct option.

Reason

Given, input tax = ₹ x

output tax = ₹ y

Tax liability = Output tax - Input tax

= ₹ (y - x)

Hence, the tax liability on the dealer is ₹ (y - x).

John sells goods worth ₹ 2,000 to Manish belonging to the same state. John gives a discount of 20% and charges GST = 5%. Then John gets :

1. ₹ 20

2. ₹ 850

3. ₹ 1,680

4. ₹ 2,250

Answer

Option 3 is the correct option.

Reason

Given, Marked price of goods = ₹ 2,000

Discount = 20%

Discount(₹) on good = $\dfrac{20}{100} \times 2,000 = ₹ 400$

Discounted value = Marked price - Discount price

= 2,000 - 400

= ₹ 1,600

GST = 5% of 1600

= $\dfrac{5}{100}$ × 1,600 = ₹ 80.

Total amount John Gets = 1,600 + 80 = ₹ 1,680

Hence, the amount John Gets = ₹ 1,680.

Fill in the blanks :

When the goods/services are sold for ₹ 15,000 under intra-state transaction from station A to station B and the rate of GST is 12%.

As per GST system

(a) S.P. (excluding GST) at station A = ..........

(b) CGST = ................

     SGST = ................

(c) C.P. (excluding GST) at station B = ............

(d) If profit = ₹ 5,000

S.P. at station B = .............

Now the same goods/services are moved under inter state transaction from station B to station C and the rate of tax is 12%.

(e) GST = ..........

(f) C.P. (excluding GST) at station C = ..........

Answer

When the goods/services are sold for ₹ 15000 under intra-state transaction from station A to station B and the rate of GST is 12%.

As per GST system

(a) S.P. (excluding GST) at station A = ₹ 15000

(b) CGST = 6% of 15000 = $\dfrac{6}{100} \times 15000$ = ₹ 900

     SGST = 6% of 15000 = $\dfrac{6}{100} \times 15000$ = ₹ 900.

(c) C.P. (excluding GST) at station B = ₹ 15000

(d) If profit = ₹ 5000

S.P. at station B = ₹ 15000 + ₹ 5000 = ₹ 20000.

(e) GST = 12% of ₹ 20000 = $\dfrac{12}{100} \times 20000$ = ₹ 2400.

(f) C.P. (excluding GST) at station C = ₹ 20000.

Goods/services are sold from Agra (U.P.) to Kanpur (U.P.) for ₹ 20,000 and then Kanpur to Jaipur (Rajasthan). If the rate of GST is 18% and the profit made at Kanpur is ₹ 5,000, find :

The net GST payable by the dealer at Kanpur (GST received - GST paid).

Answer

When the goods are sold from Agra to Kanpur it is an intra-state transaction.

For dealer in Agra

S.P. = ₹ 20,000

CGST = 9% of ₹ 20,000 = ₹ 1800

SGST = CGST = ₹ 1800.

When the product is sold from Kanpur to Jaipur it is an intra-state transaction.

For dealer in Kanpur

Input-tax credit (ITC) = ₹ 1800 + ₹ 1800 = ₹ 3600.

C.P. (excluding GST) = ₹ 20000 + ₹ 5000 = ₹ 25000.

IGST = 18% of ₹ 25000 = ₹ 4500.

∴ Net GST payable at Kanpur = Output GST - Input-tax credit = ₹ 4500 - ₹ 3600 = ₹ 900.

Hence, the net GST payable at Kanpur is ₹ 900.

A is a dealer in Banaras (U.P.). He supplies goods/services, worth ₹ 8000 to a dealer B in Agra (U.P.) Dealer B in turn, supplies the same goods/services to a dealer C in Patna (Bihar) at a profit of ₹ 1200. Find the input and output taxes for the dealer C under GST system; if the rate of GST is 18% and C does not sells his goods/services further.

Answer

According to question,

For dealer A (intra-state transaction)

S.P. = ₹ 8000

For dealer B

C.P. = ₹ 8000

CGST = 9% of ₹ 8000 = ₹ 720

SGST = 9% of ₹ 8000 = ₹ 720

Given, Profit = ₹ 1200

S.P. = ₹ 8000 + ₹ 1200 = ₹ 9200.

For dealer C (inter-state transaction)

C.P. = ₹ 9200

IGST = 18% of ₹ 9200 = $\dfrac{18}{100} \times 9200$ = ₹ 1656.

∴ Input tax = ₹ 1656.

As the dealer in Patna does not sell product,

∴ Output tax = ₹ 0.

Hence, the input tax = ₹ 1656 and output tax = ₹ 0.

A is a dealer in Meerut (UP). He supplies goods/services, worth ₹ 15000 to dealer B in Ratlam (MP). Dealer B, in turn, supplies the same goods/services to dealer C in Jabalpur (MP) at a profit of ₹ 3000. If the rate of tax (under the GST system) is 18%, find :

(i) the cost (excluding GST) of goods/services to the dealer C in Jabalpur (assuming that the dealer C does not sell the goods/services further).

(ii) net tax payable by dealer B.

Answer

For A (case of inter-state transaction)

S.P. in Meerut = ₹ 15000

IGST = 18% of 15000 = $\dfrac{18}{100} \times ₹ 15000$ = ₹ 2700.

Input tax for B = ₹ 2700.

Given profit on selling to C = ₹ 3000

∴ S.P. in Ratlam = ₹ 15000 + ₹ 3000 = ₹ 18000.

For C (case of intra-state transaction)

C.P. = ₹ 18000

CGST = 9% of ₹ 18000 = $\dfrac{9}{100} \times 18000$ = ₹ 1620

SGST = CGST = ₹ 1620.

(i) Cost for dealer C = S.P. for dealer in Ratlam + GST = ₹ 18000 + ₹ 1620 + ₹ 1620 = ₹ 21240.

Hence, the cost of goods/services for dealer C = ₹ 21240.

(ii) Output tax for B = CGST + SGST = ₹ 1620 + ₹ 1620 = ₹ 3240

∴ Net GST payable by dealer B = Output tax - Input tax = ₹ 3240 - ₹ 2700 = ₹ 540.

Hence, the net tax payable by dealer = ₹ 540.

A dealer X in Hapur (UP) supplies goods/services, worth ₹ 50,000 to some other dealer Y in the same city. Now the dealer Y supplies the same goods/services to dealer Z in Calcutta at a profit of ₹ 20,000. Find :

(i) Output and input taxes for the dealer Y

(ii) Net GST payable by dealer Y.

[The rate of GST at each stage is 28%]

Answer

According to question we have,

For dealer X (intra-state transaction)

SP = ₹ 50000

For dealer Y (intra-state transaction)

CP = ₹ 50000

CGST = 14% of 50000 = $\dfrac{14}{100} \times 50000$ = ₹ 7000

SGST = 14% of 50000 = $\dfrac{14}{100} \times 50000$ = ₹ 7000

Input tax = ₹ 7000 + ₹ 7000 = ₹ 14000

Profit of dealer Y = ₹ 20000

S.P. of dealer Y = ₹ 50000 + ₹ 20000 = ₹ 70000.

For dealer Z (inter-state transaction)

CP = ₹ 70000

IGST = 28% of ₹ 70000 = $\dfrac{28}{100} \times 70000$ = ₹ 19600

(i) Output tax for Y = Input tax for Z = ₹ 19600.

Input tax of dealer Y = ₹ 14000.

Hence, for dealer Y, Output tax = ₹ 19600 and Input tax = ₹ 14000.

(ii) Net GST payable by dealer Y = Output tax - Input tax

= ₹ 19600 - ₹ 14000 = ₹ 5600.

Hence, net GST payable for Y = ₹ 5600.

Consultancy services, worth ₹ 50000 are transferred from Delhi to Kolkata at the rate of GST 18% and then Kolkata to Nainital (with profit = ₹ 20000) at the same rate of GST. Find the output tax at

(i) Delhi

(ii) Kolkata

(iii) Nainital

Answer

(i) Delhi to Calcutta (Transaction is an inter state transaction)

IGST = 18% of ₹ 50000 = $\dfrac{18}{100} \times 50000$ = ₹ 9000.

Hence, the output tax in Delhi = ₹ 9000.

(ii) For Calcutta,

C.P. = ₹ 50000

Profit in sending to Nainital = ₹ 20000

S.P. = ₹ 50000 + ₹ 20000 = ₹ 70000.

Transaction is an inter state transaction

IGST = $\dfrac{18}{100} \times 70000$ = ₹ 12600

Hence, the output tax in Calcutta = ₹ 12600.

(iii) Since, the dealer in Nainital does transfer the services further

Hence, output tax = ₹ 0

Hence, the output tax in Nainital = ₹ 0.

For a trader, marked price of a refrigerator = ₹ 15,680 exclusive of GST, (GST is 12%). Gagan, a customer for this refrigerator, asks the trader to reduce the marked price of the refrigerator to such an extent that its reduced price plus GST on it is equal to marked price of the refrigerator. Find the required reduction.

Answer

Let the new M.P. of refrigerator be ₹ x.

According to question,

$\Rightarrow x + 12$

Reduction in price = ₹ 15680 - ₹ 14000 = ₹ 1680.

Hence, the required reduction in price = ₹ 1680.