Question

‘A’ purchase an article for Rs 3,600 and sells it to ‘B’ for Rs 4,800. B, in turn, sells the article to C for Rs 5,500. If the GST is 12% ; find the GST levied on A and B.

Answer 1

Step 1: Given terms:

The cost price of the article for A $=\mathrm{Rs}.3600$.

GST rate $=12\%$

Step 2: Tax received by ‘A’:

'A’ purchases an article for $\mathrm{Rs}.3600$ and sells it to ‘B’ for $\mathrm{Rs}.4800$.

The profit taken by ‘A’ $=4,800-3,600=\mathrm{Rs}.1,200$

The GST levied on A is computed as:

$\begin{array}{rcl}\mathrm{GST}\mathrm{levied}\mathrm{on}\mathrm{A}& =& 1,200\times \frac{12}{100}\\ & =& \mathrm{Rs}.144\end{array}$

Step 3: Tax received by ‘B’:

‘B’ sells the article to ‘C’ for $\mathrm{Rs}.5500$.

The profit taken by ‘B’ $=5,500-4,800=\mathrm{Rs}.700$

The GST levied on B is computed as:

$\begin{array}{rcl}\mathrm{GS}\mathrm{T}\mathrm{levied}\mathrm{on}\mathrm{B}& =& 700\times \frac{12}{100}\\ & =& \mathrm{Rs}.84\end{array}$

Hence, the GST levied on A and B are $\mathrm{Rs}.144$ and $\mathrm{Rs}.84$ respectively.