Question

A wholesaler purchased electric goods for the taxable amount of Rs. 1,50,000. He sold it to the retailer for the taxable amount of Rs 1,80,000. Retailer sold it to the customer for the taxable amount of Rs. 2,20,000. Rate of GST is 18%. Show the computation of GST in tax invoices of sales. Also find the payable CGST and payable SGST for wholesaler and retailer.

Answer 1

Hint: In this problem it is given a wholesaler bought electrical goods for a certain price that was taxable. He sold it for a taxable value to the retailer. The retailer sold it for a taxable value to the buyer. GST prices are 18 percent. We have to show the GST estimate in the sales tax invoice and also find the payable CGST and payable SGST for wholesalers and retailers. First, we will find out the tax paid at the time of purchase and at the time of selling for both the wholesaler and retailer respectively. And then find the payable CGST and SGST for wholesaler and retailer.

Complete step by step solution:
It is given a wholesaler purchased electric goods for the taxable amount of Rs. 1,50,000. He sold it to the retailer for the taxable amount of Rs 1,80,000. The retailer sold it to the customer for the taxable amount of Rs. 2,20,000. The rate of GST is 18%. We have to show the GST estimate in the sales tax invoice and also find the payable CGST and payable SGST for wholesaler and retailer.

1). For Wholesaler,
Given,
Purchased taxable amount of Electric Goods $ = Rs.1,50,000$
Rate of GST is $18\% $.
Therefore, tax paid at the time of purchase $\begin{array}{l} = 18\% \;of\;Rs.1,50,000\\ = \dfrac{{18}}{{100}} \times 150000\\ = 18 \times 1500\\ = Rs.27000\end{array}$
Selling taxable amount of Electric Goods $ = Rs.1,80,000$.
Therefore, tax collected at the time of sale
$\begin{array}{l} = 18\% \;of\;Rs.1,80,000\\ = \dfrac{{18}}{{100}} \times 180000\\ = 18 \times 1800\\ = Rs.32400\end{array}$

Accordingly,
CGST and SGST shown on wholesaler's tax invoice
$\begin{array}{l} = \dfrac{{32400}}{2}\\ = Rs.16200\end{array}$
Now, to find GST payable by wholesaler we need to subtract tax paid at the time of purchase from the tax collected at the time of selling.
Therefore,
GST payable by wholesaler$ = $ Tax collected at the time selling $ - $ Tax paid at the time of purchase.
Substituting the values of tax collected at the time of sale which is $Rs.32400$ and tax paid at the time of purchase which is $Rs.27000$.
GST payable by wholesaler $\begin{array}{l} = Rs.32400 - Rs.27000\\ = Rs.5400\end{array}$
Therefore, CGST and SGST to be paid by wholesaler $\begin{array}{l} = \dfrac{{5400}}{2}\\ = Rs.2700\end{array}$

Now, we will find the retailer.

2). For Retailer,
Purchased taxable amount of Electric Goods $ = Rs.1,80,000$
Rate of GST is $18\% $.
Therefore, tax paid at the time of sale $\begin{array}{l} = 18\% \;of\;Rs.1,80,000\\ = \dfrac{{18}}{{100}} \times 180000\\ = 18 \times 1800\\ = Rs.32400\end{array}$
Selling taxable amount of Electric Goods $ = Rs.2,20,000$.
Therefore, tax collected at the time of sale $\begin{array}{l} = 18\% \;of\;Rs.2,20,000\\ = \dfrac{{18}}{{100}} \times 220000\\ = 18 \times 2200\\ = Rs.39600\end{array}$
Therefore,
GST payable by wholesaler$ = $ Tax collected at the time selling $ - $ Tax paid at the time of purchase.

Substituting the values of tax collected at the time of sale which is $Rs.39600$ and tax paid at the time of purchase which is $Rs.32400$.
GST payable by wholesaler $\begin{array}{l} = Rs.39600 - Rs.32400\\ = Rs.7200\end{array}$
Therefore, CGST and SGST to be paid by wholesaler $\begin{array}{l} = \dfrac{{7200}}{2}\\ = Rs.3600\end{array}$

Hence,
The CGST and SGST paid by the wholesaler$ = Rs.2700$.
And
The CGST and SGST paid by the wholesaler$ = Rs.3600$.

Note: Here, we have to find out the tax paid at the time of purchase and at the time of selling for both the wholesaler and retailer respectively. And then find the payable CGST and SGST for wholesaler and retailer. Since the GST rate is given and by applying the GST rate we find our results.