Question

A is a dealer in Banaras (U.P). He supplies goods/services worth ${\text{Rs 8000}}$ to a dealer B in Agra (U.P). Dealer B, in turn, supplies the same goods/services to the dealer C in Patna (Bihar) at the profit of ${\text{Rs 1200}}$. Find the input and output taxes for the dealer C under the GST system; If the rate of GST is $18\% $ and C does not sell his goods/services further.

Answer 1

Hint: Here we must be aware of the term GST which stands for Goods and Service tax. In this type of tax the shopkeeper who buys the product/goods at the specific rate needs to pay the tax which involves the transportation and the destination tax and is paid by the customer also which goes into the government account. It is paid at two levels: state and the central and both the tax are equal.
So here we need to apply this and get our result.

Complete step-by-step answer:
Here we are given that A is a dealer in Banaras (U.P). He supplies goods/services worth ${\text{Rs 8000}}$ to a dealer B in Agra (U.P). Dealer B, in turn, supplies the same goods/services to the dealer C in Patna (Bihar) at the profit of ${\text{Rs 1200}}$and we need to find the input and output taxes for the dealer C under GST system if the rate of GST is $18\% $ and C does not sell his goods/services further.
 Let us consider the first sentence we are told that A sells the good to the dealer B at the rate of ${\text{Rs 8000}}$
So for dealer A:
Selling price (S.P)$ = {\text{Rs 8000}}$
For B this will be the cost price (C.P)
So for B
$CP = {\text{Rs 8000}}$
As the rate of GST is $18\% $ so he will pay half of the GST at the state level and half at the central level.
So we get Central GST (CGST)$ = 9\% {\text{ of 8000}} = \dfrac{9}{{100}}{\text{(8000) = Rs 720}}$
State GST (SGST) $ = 9\% {\text{ of 8000}} = \dfrac{9}{{100}}{\text{(8000) = Rs 720}}$
As Dealer B makes the profit of ${\text{Rs 1200}}$
So his selling price is ${\text{Rs 1200}}$ more than his cost price.
So Selling Price$ = CP + {\text{Rs1200}} = {\text{Rs(8000 + 1200)}} = {\text{Rs 9200}}$
Now as it is told that he sells this to the dealer C so we get that selling price for B will be the cost price for the dealer C
For C
Cost Price$ = {\text{Rs9200}}$
As he does not sell it further so he need to pay full GST of $18\% $
This will be his input tax paid
Input tax$ = 18\% {\text{ of Rs9200}}$
$ = \dfrac{{18}}{{100}}(9200) = {\text{Rs1656}}$
Since dealer is in Patna and does not sell it further so
Output Tax$ = {\text{Rs }}0$

Note: Here we must have the knowledge of what the GST means and how the division of it is done in state and the central level. We must know that it is equally divided in state and the central level.