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A dealer in Delhi buys fertiliser for ₹16000 from a wholesaler in Delhi. He sells it to a farmer in Rajasthan at a profit of 25%. If the rate of GST is 5%, find:

(i) the tax (under GST) paid by the wholesaler to Governments.

(ii) the tax (under GST) paid by the dealer to the Government.

(iii) the amount which the farmer pay for the fertiliser.

GST

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Answer

(i) As the dealer in Delhi buys the fertiliser for ₹16000 from a wholesaler in Delhi, so this sale is intra-state.
Rate of GST is 5%. So GST comprises of CGST at 2.5% and SGST at 2.5%

CGST collected by the wholesaler = 2.5% of 16000 = 2.5100\dfrac{2.5}{100} x 16000 = ₹400

SGST collected by the wholesaler = 2.5% of 16000 = 2.5100\dfrac{2.5}{100} x 16000 = ₹400

∴ Amount of tax paid by the wholesaler to the Central and State Governments:

CGST = ₹400 to the Central government and

SGST = ₹400 to the Delhi government

(ii) Selling price of the fertiliser by the dealer to the farmer = Purchase price + Profit

=16000+(25100×16000)=16000+4000=20000= 16000 + \Big(\dfrac{25}{100} \times 16000\Big) \\[0.5em] = 16000 + 4000 \\[0.5em] = \bold{₹20000}

As the dealer sells the fertiliser to a farmer in Rajasthan, so this sale is inter-state.
Rate of GST is 5%. So, on this sale IGST is levied at 5%.

IGST collected by the dealer from the farmer = 5% of 20000 = 5100\dfrac{5}{100} x 20000 = ₹1000

Input GST of the dealer = CGST + SGST = ₹400 + ₹400 = ₹800

Output GST of the dealer = IGST = ₹1000

Net tax liability of the dealer = Output GST - Input GST
= ₹1000 - ₹800 = ₹200

∴ The dealer pays ₹200 IGST to the Central Government.

(iii) The total amount paid by the farmer = Selling price of the fertiliser + GST paid by the farmer
= ₹20000 + IGST collected by the dealer
= ₹20000 + ₹1000
= ₹21000

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