A manufacturer sells a Hercules cycle to a dealer for $₹ 18000$ and the dealer sells it to a consumer at a profit of $₹ 1500$ . If the sales are intra state and the rate of GST is $12 %$ , find
(i) how much GST amount paid by the dealer to the State Government?
(ii) the GST amount received by the Central Government.
(iii) the GST amount received by the State Government.
(iv) the amount that the consumer pays for the Hercules cycle.

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Solution

Step 1: Find the price at which the dealer sells the cycle.
Given, the Goods and Service Tax (GST) rate $= 12 %$
Profit earned by the dealer $= ₹ 1500$
Selling Price of the manufacturer = Cost Price of the dealer $= ₹ 18000$
According to the question, the sales are intrastate that is why the tax will be given by the seller as the Central Goods and Services Tax (CGST)% and State Goods and Services Tax (SGST)% to the Central and State government respectively.
∴ $C G S T % = S G S T % = \frac{G S T %}{2}$
$= \frac{12}{2} = 6 %$
Now, the amount of SGST and CGST collected by the manufacturer from a dealer is the input SGST and CGST of the dealer.
$I n p u t S G S T = I n p u t C G S T = S G S T % o f C o s t p r i c e o f t h e d e a l e r$
$= \frac{6}{100} \times 18000 = ₹ 1080$
As the dealer sells a Hercules cycle at a profit of $₹ 1500$ ,
∴ $S e l l i n g p r i c e o f t h e d e a l e r = C o s t P r i c e o f t h e d e a l e r + P r o f i t$
$= 18000 + 1500 = ₹ 19500$
Step 2: Find the tax paid by the dealer to the State Government
(i) Now, the amount of SGST and CGST collected by the dealer from a consumer is the output SGST and CGST of the dealer.
$O u t p u t S G S T = O u t p u t C G S T = S G S T % o f S e l l i n g P r i c e o f t h e d e a l e r$
$= \frac{6}{100} \times 19500 = ₹ 1170$
$T a x p a i d b y t h e d e a l e r t o t h e S t a t e G o v e r n m e n t (u n d e r G S T)$
$= O u t p u t S G S T - I n p u t S G S T$
$= 1170 - 1080 = ₹ 90$
Step 3: Find the GST amount received by the Central Government
(ii) $T h e G S T a m o u n t r e c e i v e d b y t h e C e n t r a l g o v e r n m e n t = O u t p u t C G S T$
$= ₹ 1170$
Step 4: Find the GST amount received by the State Government
(iii) $T h e G S T a m o u n t r e c e i v e d b y t h e S t a t e g o v e r n m e n t = O u t p u t S G S T$
$= ₹ 1170$
Step 5: Find the amount paid by the consumer to the dealer
(iv) $A m o u n t p a i d b y t h e c o n s u m e r t o t h e d e a l e r = S e l l i n g P r i c e o f t h e d e a l e r + O u t p u t C G S T + O u t p u t S G S T$
$= 19500 + 1170 + 1170 = ₹ 21840$
Final Answer:
(i) The amount of tax paid by the dealer as State Goods and Services Tax is $₹ 90$ .
(ii) The GST amount received by the Central government is $₹ 1170$ .
(iii) The GST amount received by the State government is $₹ 1170$ .
(iv) The consumer paid $₹ 21840$ to the dealer for the Hercules cycle.

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