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

Question

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

KnowledgeBoat · Accepted 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.

Mathematics

GST

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