Question

A Dealer in Mumbai sold an Audi car to a dealer in Pune for ₹45 Lakhs and the Dealer in Pune sold it to the customer making a ₹3 Lakhs profit on it. If the rate of GST is 28%, how much GST will be paid to the Central Goverment in this transaction by the dealer in Pune?

• A. ₹0.84 Lakhs
• B. ₹1.68 Lakhs
• C. ₹0.36 Lakhs
• D. ₹0.42 Lakhs

Answer 1

The correct option is D ₹0.42 Lakhs

The cost of car for the dealer in Pune = ₹45 Lakhs
Profit made by the dealer in Pune = ₹3 lakhs.
SP for the Dealer in Pune = ₹45 lakhs + ₹3 lakhs= ₹48 lakhs
The total GST = 28%.
Since it is an intra state transaction CGST = SGST = $\frac{28}{2}$ = 14%

Hence, the tax liabilty of the Dealer in Pune towards CGST = $\frac{28}{2}$ = 14% of 3 Lakhs
= $\frac{14}{100}\times 3$ = 0.42 Lakhs
We can also verify:
CGST Tax liability for Dealer in Pune = Output Tax - Input Tax Credit = 14% of 48 Lakhs - 14% of 45 lakhs = 14% of 3 lakhs = ₹6.72 lakhs - ₹6.3 lakhs = ₹0.42 lakhs