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Mathematics

A shopkeeper buys an article from a wholesaler for ₹20000 and sells it to a consumer at 10% profit. If the rate of GST is 12%, find the tax liability of the shopkeeper.

GST

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Answer

Purchase price of the article = ₹20000
Profit = 10%
Rate of GST = 12%

Amount of GST paid by the shopkeeper to the wholesaler

=12% of ₹20000=(12100×20000)=2400= 12\% \text{ of } ₹20000 \\[1em] = ₹\Big(\dfrac{12}{100} \times 20000\Big) \\[1em] = ₹2400

∴ Input GST of the shopkeeper = ₹2400

Selling price of the article (excluding tax) = Purchase Price + Profit

=20000+(10100×20000)=20000+2000=22000= 20000 + \Big(\dfrac{10}{100} \times 20000\Big) \\[0.5em] = 20000 + 2000 \\[0.5em] = \bold{₹22000}

Amount of GST collected by the shopkeeper from the consumer

=12% of ₹22000=(12100×22000)=2640= 12\% \text{ of } ₹22000 \\[1em] = ₹\Big(\dfrac{12}{100} \times 22000\Big) \\[1em] = ₹2640

∴ Output GST of the shopkeeper = ₹2640

Tax liability of the shopkeeper = Output GST - Input GST
= ₹2640 - ₹2400
= ₹240

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