Question

Nazama is a proprietor of a firm, registered under GST. She has paid GST of $Rs.14,750$ on the purchase and collected $Rs.16,870$ on the sale. What is the amount of ITC to be claimed? What is the amount of GST payable?

Answer 1

Hint: As we know that the ITC is paid as the amount of input tax. And the GST is calculated by the difference in the output tax and the input tax. So by using these statements we can now easily answer the ITC and GST of the amount.

Complete step-by-step answer:
Here, in this question, Nazama is a proprietor of a firm, registered under GST.
So the GST paid by the Nazama on the purchase is equal to $Rs.14,750$ and it can also be called the input tax.
And the GST collected by Nazama on the sale is equal to $Rs.16,870$ and it can also be called the output tax.
So, as we know that the input tax credit will be the GST paid on purchase and will be equal to $Rs.14,750$ .
Therefore, the amount of ITC to be claimed will be equal to $Rs.14,750$ .
Now we will calculate the amount of GST payable, so for this, it will be the difference of output and input tax.
On substituting the values, we get
$ \Rightarrow Rs.16,870 - Rs.14,750$
And on solving the subtraction, we get
$ \Rightarrow Rs.2,120$
Therefore, the payable GST amount will be equal to $Rs.2,120$ .

Note: As we can see the question was not very difficult. Anyone can easily solve it. So while solving it we should also know about it. ITC (Input Tax Credit) under GST means A taxpayer who is liable to pay sales tax can reduce his liability against the tax already paid by him at the time of purchase of goods/ services, and pay the remaining amount to the Government.