Question

‘Pawan Medical’ supplies medicines. On some medicines the rate of GST is 12% then what is the rate of CGST and SGST?
A) 6%
B) 12%
C) 15%
D) 9%

Answer 1

Hint: We will first get to know the relation between GST, CGST and SGST and write it. Then use it and the given value of GST as 12% to get the required answer and then mark the correct option.

Complete step-by-step answer:
Let us first discuss CGST and SGST and their relation with GST.
The GST is a single indirect tax that has replaced most of the indirect taxes that were prevalent in our country before July 2017. It has paved the way for a pan-Indian comprehensive system.
CGST stands for Central government services tax and SGST stands for State government services tax.
GST is the sum of both the taxes together.
This implies that CGST + SGST = GST. …………..(1)
We must also know that CGST = SGST ……(2) always for every good and service.
Putting CGST = SGST in (1), we will get:-
SGST + SGST = GST
This can also be written as:-
2 SGST = GST
We are already given that GST is 12%. Putting this in above expression, we will get:-
2 SGST = 12%
Taking 2 from multiplication in LHS to division in RHS, we will get:-
SGST = 6%
Using (2), we get:- SGST = CGST = 6%.

Hence, the correct option is (A).

Note: The students must carefully note that which tax is provided to them, if they are given one of CGST or SGST by equating them, they will have the other one and doubling it will result in GST.
Fun Fact:- Presently, there are around 160 countries that have implemented the GST or VAT in some form or the other. France was the first country to have introduced GST. India, being a federal country, is going to have a dual-GST structure – Central GST and State GST. The only other country with a dual GST is Canada.