A manufacturer in Gujarat manufactures a machine and marks it at ₹50000. He sells the machine to a wholesaler in Jharkhand at a discount of 20%. The wholesaler sells the machine to a dealer in West Bengal at a discount of 10% on the MP. If the rate of GST is 28%, find the tax paid by the wholesaler to the Central Government.

₹1400

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₹1200

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₹1600

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₹2800

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Solution

The correct option is A ₹1400
At each stage of sale of the machine , there is an Inter-state transaction. So, the rate of GST on each transaction of machine is 28%.
For the Manufacturer :
MP = ₹50000 and discount = 20% of ₹50000.
Discount = $\frac{20}{100} \times 50000$ = ₹10000
$∴$ SP = MP - Discount
= ₹50000 - ₹10000 = ₹40000

For the Wholesaler :
CP = ₹40000
Discount = 10% of ₹50000 = $\frac{10}{100} \times 50000$ = ₹5000
SP = MP - Discount = ₹50000 - ₹5000 = ₹45000

$∴$ Tax paid by the wholesaler to the Central Government = Output Tax - Input tax
= Tax on SP - Tax on CP
= 28% of ₹45000 - 28% of ₹40000
= 28% of ₹5000
= $\frac{28}{100} \times 5000$ = ₹1400

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