Goods & Services Tax — Assertion-Reason Type Question

A dealer buys an article for ₹ 1,500. He sells it to a customer at 10% profit. The rate of GST is 18%.

Assertion (A) : The price which the customer pays for the article is ₹ 1,650 (excluding GST).

Reason (R) : GST is charged on the cost price of the article.

1. Assertion (A) is true, but Reason (R) is false.

2. Assertion (A) is false, but Reason (R) is true.

3. Both Assertion (A) and Reason (R) are correct, and Reason (R) is the correct reason for Assertion (A).

4. Both Assertion (A) and Reason (R) are correct, and Reason (R) is incorrect reason for Assertion (A).

Answer

Given,

Cost price for dealer = ₹ 1,500

Profit % of dealer on cost price = 10%

∴ Selling price of the article by dealer (excluding tax) = Cost Price + Profit

= 1,500 + 10% of 1,500

= 1,500 + $\dfrac{10}{100}$ x 1500

= 1,500 + 150

= ₹ 1,650

GST% = 18%

So, assertion (A) is true.

GST is charged on the selling price.

So, reason (R) is false.

Thus, Assertion (A) is true, and Reason (R) is false.

Hence, option 1 is the correct option.

A dealer in U.P. buys an article for ₹ 50,000 from a wholesaler in U.P.

Assertion (A): The above transaction is an intra-state transaction.

Reason (R): The sales between the same state are known as intra-state.

1. Assertion (A) is true, but Reason (R) is false.

2. Assertion (A) is false, but Reason (R) is true.

3. Both Assertion (A) and Reason (R) are correct, and Reason (R) is the correct reason for Assertion (A).

4. Both Assertion (A) and Reason (R) are correct, and Reason (R) is incorrect reason for Assertion (A).

Answer

An intra-state transaction occurs when the seller and buyer are located within the same state or union territory.

So, reason (R) is true.

The dealer and the wholesaler are both in Uttar Pradesh. Thus, the transaction is indeed an intra-state transaction.

So, assertion (A) is true and reason (R) clearly explains assertion (A).

Thus, both Assertion (A) and Reason (R) are correct, and Reason (R) is the correct reason for Assertion (A).

Hence, option 3 is the correct option.

A shopkeeper buys a TV from a manufacturer at a discount of 20% of the listed price of ₹ 54,000 and sells it to a customer at the listed price. The sales are intra-state and the rate of GST is 18%.

Assertion (A): The tax (under GST) received by the State Government is ₹ 4,860.

Reason (R): For intra-state sales, GST is divided equally among State Government and the Central government.

1. Assertion (A) is true, but Reason (R) is false.

2. Assertion (A) is false, but Reason (R) is true.

3. Both Assertion (A) and Reason (R) are correct, and Reason (R) is the correct reason for Assertion (A).

4. Both Assertion (A) and Reason (R) are correct, and Reason (R) is incorrect reason for Assertion (A).

Answer

Listed Price = ₹ 54,000

As the sales are intra-state and the rate of GST is 18%, so GST comprises of 9% as CGST and 9% as SGST.

So, reason (R) is true.

amount of GST collected by shopkeeper from consumer(or paid by consumer):

CGST = 9% of 54000 = $\dfrac{9}{100}$ x 54000 = 4860

SGST = 9% of 54000 = $\dfrac{9}{100}$ x 54000 = 4860

So, assertion (A) is true and reason (R) clearly explains assertion (A).

Thus, both Assertion (A) and Reason (R) are correct, and reason (R) is the correct reason for Assertion (A).

Hence, option 3 is the correct option.