Question

M/S Beauty Products paid $18\% $ GST on cosmetics worth Rs. $6000$ and sold to a customer for Rs. $10000$. What are the amounts of CGST and SGST shown in the tax invoice issued?

Answer 1

Hint: GST is known as the “Goods and Services Tax” and it is applied on the selling price of the product. There are three types of GST applied in India, these types are as following –
(1) Central Goods and Services Tax also known as the CGST. This type of GST is applied by the Central Government when there is an intra-state supply of the goods and services.
(2) State Goods and Services Tax also known as the SGST. This type of GST is applied by the State Government on the intra-state supply of the goods and services. The value of CGST and SGST collected from the total GST is equal.
(3) Integrated Goods and Services Tax also known as the IGST. This type of GST is applied by the Central Government on the intra-state supply of the goods and services during the import as well as the export.

Complete step-by-step answer:
Given:
The rate of GST applied on the beauty products $ = 18\% $
The cost price of the cosmetics $ = 6000$
And, the selling price of the cosmetics $ = 10000$
Then,
The amount of GST in the tax invoice is given by –
GST = 18% of the selling price of the cosmetics
So,
$
\Rightarrow {\rm{GST = 18\% of 10000}}\\
\Rightarrow {\rm{GST = }}\dfrac{{18}}{{100}} \times 10000
$
Solving this we get,
${\rm{GST = 1800}}$
And we know that,
The amount of CGST = The amount of SGST
So, ${\rm{CGST = SGST}}$
Also, we know that the total GST is the sum of CGST and SGST.
The amount of GST = The amount of CGST + The amount of SGST
So, substituting the values we get,
$
\Rightarrow {\rm{GST = CGST + SGST}}\\
{\rm{GST = 2CGST}}
$
Or,
${\rm{CGST = }}\dfrac{{{\rm{GST}}}}{{\rm{2}}}$
Substituting the value of GST, we get,
$
{\rm{CGST = SGST}}\\
{\rm{ = }}\dfrac{{1800}}{2}\\
 = 900
$
Therefore, the amount of CGST and SGST shown in the tax invoice is ${\rm{Rs}}{\rm{.900}}$.

Note: Since according to the question we do not have to calculate the value of the IGST applied on the cosmetics, we can neglect the value of IGST in the formula for the total GST. So the formula for total GST becomes,
${\rm{GST = CGST + SGST}}$