Mathematics
A wholesaler of clocks in Jaipur (Rajasthan) purchased a vintage clock for ₹ 2,000 and supplied it to a dealer in Ratlam (MP) for ₹ 2,400. This clock was sold by the Ratlam dealer to an end-user in Delhi for ₹ 3,000. If the rate of GST is 18%, calculate:
(i) the net IGST, CGST and SGST payable by Ratlam dealer
(ii) the total cost of the clock for the end-user in Delhi
GST
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Answer
Transaction 1 : Wholesaler (Jaipur, Rajasthan) to Dealer (Ratlam, MP)
This is an interstate sale. Therefore, IGST will be levied.
Selling Price (from Wholesaler to Ratlam Dealer): ₹ 2,400
IGST charged by Wholesaler: 18% of ₹ 2,400
=
= ₹ 432.
This ₹ 432 IGST paid by the Ratlam dealer becomes their Input Tax Credit (ITC).
Transaction 2: Dealer (Ratlam, MP) to End-user (Delhi)
This is also an interstate sale. Therefore, IGST will be levied.
Selling Price (from Ratlam Dealer to End-user): ₹ 3,000
IGST charged by Ratlam Dealer (Output Tax): 18% of ₹ 3,000
=
= ₹ 540
(i) The Ratlam dealer has an output IGST liability from the sale to the end-user and has an IGST input tax credit from the initial purchase.
Output GST for the Ratlam dealer :
Output IGST = ₹ 540
Input Tax Credit (ITC) available for the Ratlam dealer:
Input IGST ITC = ₹ 432
Net GST Payable by Ratlam Dealer:
Net IGST payable = Output IGST - Input IGST ITC
= ₹ 540 - ₹ 432
= ₹ 108.
Net CGST payable = ₹ 0 (No CGST involved in these interstate transactions for the dealer's output or input in this chain).
Net SGST payable = ₹ 0 (No SGST involved in these interstate transactions for the dealer's output or input in this chain).
Hence, net IGST payable = ₹ 108, net CGST payable = ₹ 0 and net SGST payable = ₹ 0.
(ii) Price of the clock for End-user (before GST): ₹ 3,000
GST Paid by End-user (IGST) : 18% of ₹ 3,000
=
= ₹ 540
Total Cost for the End-user = Price of clock + IGST paid
= ₹ 3,000 + ₹ 540
= ₹ 3,540.
Hence, total Cost for the End-user = ₹ 3,540.
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