A shopkeeper buys an item whose printed price is $₹ 4000$ from a wholesaler at a discount of $20 %$ and sells it to a consumer at the printed price. If the sales are intrastate and the rate of GST is $12 %$ , find
(i) the price of the article inclusive GST in which the shopkeeper bought it.
(ii) the amount of tax (under GST) paid by the shopkeeper to the State Government.
(iii) the amount of tax (under GST) received by the Central Government.
(iv) how much the consumer pays the amount for the article?

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Solution

Step 1: Find the Central Goods and Services Tax (CGST)% and State Goods and Services Tax (SGST)%
It is given that the Goods and Services Tax rate, $G S T % = 12 %$
Rate of Discount given by the wholesaler, $d % = 20 %$
Printed Price, $P = ₹ 4000$
Amount of discount, $D = d % o f P$
$= \frac{20}{100} \times 4000 = ₹ 800$
Selling Price of the wholesaler, $S P = P - D$
$= 4000 - 800 = ₹ 3200$
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.
∴ $C G S T % = S G S T % = \frac{G S T %}{2}$
$= \frac{12}{2} = 6 %$
Step 2: Find the price of the article inclusive of GST at which the shopkeeper bought the item.
(i) Now, the amount of SGST and CGST collected by the wholesaler from the shopkeeper is the input SGST and CGST of the shopkeeper.
$I n p u t S G S T = I n p u t C G S T = S G S T % o f S P$
$= \frac{6}{100} \times 3200 = ₹ 192$
$A m o u n t p a i d b y t h e s h o p k e e p e r t o w h o l e s a l e r = S P + I n p u t C G S T + I n p u t S G S T$
$= 3200 + 192 + 192 = ₹ 3584$
Step 3: Find the amount of tax (under GST) paid by the shopkeeper to the State Government.
(ii) According to the question, the selling price of the item set by the shopkeeper = Printed Price of the item
Now, the amount of SGST and CGST collected by the shopkeeper from a consumer is the output SGST and CGST of the shopkeeper.
$O u t p u t S G S T = O u t p u t C G S T = S G S T % o f S e l l i n g P r i c e o f s h o p k e e p e r$
$= \frac{6}{100} \times 4000 = ₹ 240$
$T a x p a i d b y t h e s h o p k e e p e r t o t h e S t a t e G o v e r n m e n t (u n d e r G S T)$
$= O u t p u t S G S T - I n p u t S G S T$
$= 240 - 192 = ₹ 48$
Step 4: Find the amount of tax (under GST) received by the Central Government.
(iii) $T h e G S T a m o u n t r e c e i v e d b y t h e C e n t r a l G o v e r n m e n t = O u t p u t C G S T$
$= O u t p u t S G S T = ₹ 240$
Step 5: Find the amount paid by the consumer to the shopkeeper.
(iv) $A m o u n t p a i d b y t h e c o n s u m e r t o s h o p k e e p e r = S e l l i n g P r i c e o f t h e s h o p k e e p e r + O u t p u t C G S T + O u t p u t S G S T$
$= 4000 + 240 + 240 = ₹ 4480$
Final Answer:
(i) The price of the article inclusive of GST at which it is bought by the shopkeeper is $₹ 3584$ .
(ii) The amount of tax paid by the shopkeeper as State Goods and Services Tax is $₹ 48$ .
(iii) The GST amount received by the Central government is $₹ 240$ .
(iv) The consumer paid $₹ 4480$ to the shopkeeper for an item.

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