Question

A product is sold from Kanpur (UP) to Banaras (UP) for Rs. 12000 and Banaras to Ranchi (Jharkhand) at a profit of Rs. 4000. If the rate of GST is 18%. Find the net GST payable at Banaras?

Answer 1

Hint: In order to find the net GST, first we need to find the cost price of the product as we know that the selling price of a product given is equal to the addition of the cost price and the GST of the product. Later we find GST on the cost price and then on the price i.e. selling price of the product, after adding both the GST, we will get the net GST of the product.

Formula used:
The formula used to calculate the purchase price is
\[{\text{Taxable value of washing machine + Amount of GST on washing machine }}\]
While for calculating Amount of CGST and SGST the formula used is
\[\dfrac{1}{2} \times {\text{Amount of GST on product }}\]

Complete step by step solution:
Let the cost price of the product given be ‘x’.
It is given that,
Rate of GST = 18% = 0.18
GST payable at a product ‘x’ = 0.18x
Selling price of the product = Rs. 12000
Selling price of any product includes the cost price and the GST payable at the product.
Therefore,
\[x+0.18x=12000\]
Now, solving for the value of ‘x’
\[1.18x=12000\]
Dividing both the sides of the equation by 1.18, we get
\[x=10169.50\]
Thus,
The cost price of a product = \[Rs.10169.50\]
Now,
18% GST on the cost price is = \[0.18\times 10169.50=1830.51\]
Thus, the GST payable is Rs. 1830.51
Now,
Another GST of product is = \[0.18\times 12000=Rs.2160\]
Therefore,
Total GST is = Rs. 1830.51 + Rs. 2160 = Rs. 3990.51

Therefore,
The GST i.e. goods and services tax payable at Banaras is equal to the Rs. 3990.51

Note: In order to solve these types of questions, students should need to remember the formula or a way to find the cost price of a product i.e. selling price is equal to the sum of cost price and the GST on the cost price and it is given by the formula;
Selling price = cost price + GST on the cost price
Students should be very careful while doing the calculation part and solving the question to avoid making any error.