A manufacturer in Gujarat manufactures a machine and marks it at ₹50,000. 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 marked price. If the rate of GST is 28%, the tax paid by the wholesaler to the Central Government is ₹_____.
A manufacturer in Gujarat manufactures a machine and marks it at ₹50,000. 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 marked price. If the rate of GST is 28%, the tax paid by the wholesaler to the Central Government is ₹_____.
The correct option is D 1,400
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 :
Marked Price = ₹50,000
Discount = 20% of ₹50,000.
Selling Price
= Marked Price - Discount
= ₹50,000 - 20% of ₹50,000
= 50,000 - 10,000
= ₹40,000
For the Wholesaler :
Cost Price = ₹40,000
Discount = 10% of Marked Price i.e. ₹50,000 = ₹5,000
Selling Price
= Marked Price - Discount
= 50,000 - 5,000
= ₹45,000
∴ Tax paid by the wholesaler to the Central Government
= Output tax − Input tax
= Tax on Selling Price - Tax on Cost Price
= 28% of ₹45,000 - 28% of ₹40,000
=(28100)×5000
= ₹1,400
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 :
Marked Price = ₹50,000
Discount = 20% of ₹50,000.
Selling Price
= Marked Price - Discount
= ₹50,000 - 20% of ₹50,000
= 50,000 - 10,000
= ₹40,000
For the Wholesaler :
Cost Price = ₹40,000
Discount = 10% of Marked Price i.e. ₹50,000 = ₹5,000
Selling Price
= Marked Price - Discount
= 50,000 - 5,000
= ₹45,000
∴ Tax paid by the wholesaler to the Central Government
= Output tax − Input tax
= Tax on Selling Price - Tax on Cost Price
= 28% of ₹45,000 - 28% of ₹40,000
=(28100)×5000
= ₹1,400
