A shopkeeper buys an item whose list price is $₹ 8000$ at some rate of discount from a wholesaler. He sells the item to a consumer at the list price. The sales are intra state and the rate of GST is $18 %$ . Suppose, the shopkeeper pay a tax (under GST) of $₹ 72$ to the State government. Find the rate of discount in which he bought the item from the wholesaler.

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Solution

Step 1: Find the Central Goods and Services Tax (CGST)% and State Goods and Services Tax (CGST)%
Given, the Goods and Service Tax (GST) rate $= 18 %$
Tax paid to State government $= ₹ 72$
List Price $= ₹ 8000$
According to the question, the sales are intrastate, that is why the tax will be given by the seller are the Central Goods and Services Tax (CGST) and State Goods and Services Tax (CGST) to the Central and State government respectively.
∴ $C G S T % = S G S T % = \frac{G S T %}{2}$
$= \frac{18}{2} = 9 %$
Step 2: Find the amount of SGST received by the wholesaler (Input SGST) from the shopkeeper.
Let us assume that the discount given by the wholesaler is $₹ x$ .
$S e l l i n g P r i c e = L i s t P r i c e - D i s c o u n t$
$= ₹ (8000 - x)$
$I n p u t S G S T = S G S T % o f S e l l i n g P r i c e$
$= \frac{9}{100} \times (8000 - x) = \frac{9}{100} \times 8000 - \frac{9}{100} x = ₹ (720 - \frac{9}{100} x)$
Step 3: Find the amount of SGST collected by the shopkeeper (Output SGST) from the consumer
$O u t p u t S G S T = S G S T % o f L i s t P r i c e$
$= \frac{9}{100} \times 8000 = ₹ 720$
Step 4: Find the discount Value
$T a x p a i d b y t h e s h o p k e e p e r t o t h e s t a t e = O u t p u t S G S T - I n p u t S G S T$
$72 = 720 - (720 - \frac{9}{100} x) 72 = 720 - 720 + \frac{9}{100} x 72 = \frac{9}{100} x x = \frac{72 \times 100}{9} x = ₹ 800$
Step 5: Find the rate of discount given by the wholesaler
$R a t e o f D i s c o u n t = \frac{D i s c o u n t v a l u e}{L i s t P r i c e} \times 100$
$= \frac{x}{8000} \times 100 = \frac{800}{8000} \times 100 = 10 %$
Final Answer: The rate of discount given by the wholesaler to the shopkeeper on an item is $10 %$ .

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