Question

Goods/ services are sold from Kota (Rajasthan) to Mumbai for Rs. 20, 000 and then from Mumbai to Pune. If the rate of G.S.T is $12\%$ and the profit made at Mumbai is Rs. 5000; find the net GST paid at Pune, if the dealer at Pune is the end user.

Answer 1

Hint: First of all goods/ services are sold from Kota (Rajasthan) to Mumbai for Rs. 20, 000 so the cost price of the goods for the dealer which is in Mumbai is Rs. 20, 000. It is also given that the dealer is making a profit of Rs. 5000 so using the following formula we can find the selling price of goods from Mumbai to Pune $\text{Profit}=S.P.-C.P.$ where S.P. (Selling Price) and C.P. (Cost Price). Now, we have to calculate the G.S.T paid by the dealer in Pune which is equal to $12\%$ of selling price of goods from Mumbai because it is given that the G.S.T percent levied on the goods is $12\%$.

Complete step-by-step answer:
The cost price that incur on the dealer in Mumbai is equal to Rs. 20, 000. And it is given that dealer has made a profit of $12\%$ so we can find the selling price of the goods that dealer from Mumbai has charged to the dealer in Pune by the following formula:
$\text{Profit}=S.P.-C.P.$
In the above formula, S.P. is the selling price and C.P. is the cost price.
Substituting Profit as 5000, C.P. as 20, 000 in the above formula we get,
$\begin{align}
  & 5000=S.P.-20000 \\
 & \Rightarrow S.P.=5000+20000 \\
 & \Rightarrow S.P.=25000 \\
\end{align}$
Hence, the selling price of goods by dealer in Mumbai to dealer in Pune is equal to Rs. 25000.
Now, these 25000 rupees are the cost price for dealers in Pune and we have to find the net G.S.T paid at Pune. It is given that G.S.T percent levied on the goods is $12\%$ so we are going to find $12\%$ of Rs 25000.
We are going to calculate $12\%$ of Rs 25000 by multiplying 25000 by 12 and then divide by 100.
$\begin{align}
  & \dfrac{12}{100}\times 25000 \\
 & = 3000 \\
\end{align}$
Hence, the new G.S.T paid at Pune is equal to Rs. 3000.

Note: In this problem, if you don’t know about G.S.T then also you can solve this problem because we have given the rate of G.S.T when there is a supply of goods from one location to another so you can use this rate in the finding net G.S.T at Pune when goods are supplied from Mumbai to Pune.
And one more thing, be careful in writing the formula for Profit which is equal to:
$S.P.-C.P.$
Don’t subtract S.P. from C.P. You can remember this formula as when we get profit or gains when our selling price is higher than cost price that’s why we subtract C.P. from S.P. in this formula of profit.