Question

Sandeep Electronics purchased ceiling fans for Rs.50,176 (With GST) and sold them to the customers for Rs.56000 (With GST). The rate of GST is \[12\% \]. Find
(a) Taxable value of fans in each case
(b) Amount of CGST and SGST payable by Sandeep Electronics

Answer 1

Hint: Here we use the concept of SGST, CGST and GST to solve this question. Assume the initial amount without any tax as a variable and form an equation using the percentage and the amount at which fans are brought. Similarly form an equation and find the value at which the fans are sold. Calculate the total GST in both cases.
* GST is defined as Goods and service tax. It is the tax or extra money you pay while purchasing any good or service. We divide GST into two equal parts SGST and CGST
1) SGST: State goods and service tax
2) CGST: Central goods and service tax

Complete step by step answer:
We solve the question in two cases:
CASE 1: Sandeep Electronics purchased fans
We are given that Sandeep Electronics purchased Ceiling fans for Rs.50176 including the GST
Let us consider the initial value of ceiling fans as ‘x’
We know that initial value of an item plus percentage of GST applied on that item gives the payable amount
Here GST is \[12\% \]
\[ \Rightarrow x + 12\% x = 50176\]
Using the concept of percentage, we can write
\[ \Rightarrow x + \dfrac{{12x}}{{100}} = 50176\]
Take LCM on LHS of the equation
\[ \Rightarrow \dfrac{{100x + 12x}}{{100}} = 50176\]
\[ \Rightarrow \dfrac{{112x}}{{100}} = 50176\]
Cancel same terms from numerator and denominator in LHS
\[ \Rightarrow \dfrac{{28x}}{{25}} = 50176\]
Multiply both sides of the equation by fraction \[\dfrac{{25}}{{28}}\]
\[ \Rightarrow \dfrac{{28x}}{{25}} \times \dfrac{{25}}{{28}} = 50176 \times \dfrac{{25}}{{28}}\]
Cancel same terms from numerator and denominator on both sides of the equation
\[ \Rightarrow x = 44800\]
\[\therefore \]Initial price of ceiling fans is Rs.44800 ………….… (1)
Since, the GST is divided into two equal parts SGST and CGST.
Then, CGST \[ = \]SGST \[ = \dfrac{1}{2}\]GST
Since we are given GST here is \[12\% \]
\[ \Rightarrow \]SGST \[ = \]CGST \[ = \dfrac{1}{2} \times 12\% \]
\[ \Rightarrow \] SGST \[ = \]CGST \[ = 6\% \]
We calculate the taxable value of fans.
\[ \Rightarrow \] SGST \[ = 6\% \]of Rs.44800
\[ \Rightarrow \] SGST \[ = \dfrac{6}{{100}} \times 44800\]
\[ \Rightarrow \] SGST \[ = \]Rs.2688
Since SGST \[ = \]CGST
\[\therefore \] SGST \[ = \]CGST \[ = \]Rs.2688
So, taxable value is GST
\[ \Rightarrow \]GST \[ = \]CGST \[ + \]SGST
\[ \Rightarrow \]GST \[ = 2688 + 2688\]
\[ \Rightarrow \]GST \[ = 5376\]
So, the taxable value of fans is Rs.5376 …………...… (2)
CASE 2: Sandeep Electronics sold fans
We are given that Sandeep Electronics sold Ceiling fans for Rs.56000 including the GST
Let us consider the initial value of ceiling fans as ‘y’
We know that initial value of an item plus percentage of GST applied on that item gives the payable amount
Here GST is \[12\% \]
\[ \Rightarrow y + 12\% y = 56000\]
Using the concept of percentage, we can write
\[ \Rightarrow y + \dfrac{{12y}}{{100}} = 56000\]
Take LCM on LHS of the equation
\[ \Rightarrow \dfrac{{100y + 12y}}{{100}} = 56000\]
\[ \Rightarrow \dfrac{{112y}}{{100}} = 56000\]
Cancel same terms from numerator and denominator in LHS
\[ \Rightarrow \dfrac{{28y}}{{25}} = 56000\]
Multiply both sides of the equation by fraction \[\dfrac{{25}}{{28}}\]
\[ \Rightarrow \dfrac{{28y}}{{25}} \times \dfrac{{25}}{{28}} = 56000 \times \dfrac{{25}}{{28}}\]
Cancel same terms from numerator and denominator on both sides of the equation
\[ \Rightarrow x = 50000\]
\[\therefore \]Initial price of ceiling fans is Rs.50000 …………...… (3)
Since, the GST is divided into two equal parts SGST and CGST.
Then, CGST \[ = \]SGST \[ = \dfrac{1}{2}\]GST
Since we are given GST here is \[12\% \]
\[ \Rightarrow \]SGST \[ = \]CGST \[ = \dfrac{1}{2} \times 12\% \]
\[ \Rightarrow \] SGST \[ = \]CGST \[ = 6\% \]
We calculate the taxable value of fans.
\[ \Rightarrow \] SGST \[ = 6\% \]of Rs.50000
\[ \Rightarrow \] SGST \[ = \dfrac{6}{{100}} \times 50000\]
\[ \Rightarrow \] SGST \[ = \]Rs.3000
Since SGST \[ = \]CGST
\[\therefore \] SGST \[ = \]CGST \[ = \]Rs.3000
So, taxable value is GST
\[ \Rightarrow \]GST \[ = \]CGST \[ + \]SGST
\[ \Rightarrow \]GST \[ = 3000 + 3000\]
\[ \Rightarrow \]GST \[ = 6000\]
So, the taxable value of fans is Rs.6000 … (4)

(a) Therefore, the taxable value in each case is:
Purchased by Sandeep Electronics, GST is Rs.5736
Sold by Sandeep Electronics, GST is Rs.6000

(b) Amount of CGST and SGST payable by Sandeep electronics is:
Amount of SGST paid \[ = \]SGST from selling the fans \[ - \]SGST from buying the fans
Substitute values in RHS
\[ \Rightarrow \]Amount of SGST paid \[ = 3000 - 2688\]
\[ \Rightarrow \]Amount of SGST paid \[ = 312\]
As SGST \[ = \]CGST
\[ \Rightarrow \]Amount of CGST paid \[ = 312\]

Therefore, the amount of SGST and CGST payable by Sandeep Electronics is Rs.312

Note:
Students can easily get confused in finding the value of option (b) as they tend to think it will be the taxable amount on which they sold ceiling fans. Keep in mind the shopkeeper has to pay the taxes to the government as well, so we calculate the difference in the taxes which were paid by him and on which he sold the product.