A shopkeeper in Tamil Nadu buys a bullet bike at the printed price of $₹ 40000$ from a wholesaler in West Bengal. The shopkeeper sells the bullet bike to a consumer in Tamil Nadu at a profit of $25 %$ on the basic cost price. If the rate of GST is $18 %$ , find
(i) the price of the bullet bike inclusive of tax (under GST) in which the shopkeeper bought it.
(ii) how much the shopkeeper tax amount pays to the Central Government?
(iii) the amount of tax (under GST) received by West Bengal Government.
(iv) the amount of tax (under GST) received by Central Government.
(v) the amount which the consumer pays for the bullet bike.

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Solution

Step 1: Given data
Printed Price of the bullet bike, $P = ₹ 40000$
Selling Price of the wholesaler, $S P_{1} = P$
Selling Price of the shopkeeper, $S P_{2} = 25 % a b o v e S P_{1}$ (∵ Selling Price of the wholesaler = Cost Price of the shopkeeper)
Goods and Services Tax, $G S T % = 18 %$
Step 2: Find the amount paid by the shopkeeper to the wholesaler
(i) As the states of the shopkeeper and wholesaler are different i.e., Tamil Nadu and West Bengal that is why it is an interstate sale due to which they have to pay Integrated Goods and Services Tax (IGST) to the Central government as it is applied to interstate sales of goods and services. IGST% is always equal to the GST%.
∴ $I G S T = G S T % x S P_{1}$
$= \frac{18}{100} \times 40000 = ₹ 47200$
and The price paid by the shopkeeper (including IGST) $= S P_{1} + I G S T$
$= 40000 + 7200 = ₹ 47200$
Step 3: Find the amount of output Central Goods and Services Tax (CGST)% and State Goods and Services Tax (SGST)% of the shopkeeper
As the IGST is paid by the seller to the Central Government for the interstate sale with the shopkeeper, the wholesaler will pay the IGST amount of $₹ 7200$ to the Central Government.
∴ The shopkeeper will not pay any tax to the Central Government
The Selling Price of the shopkeeper, $S P_{2} = P + P r o f i t % x P$
$= 40000 + \frac{25}{100} \times 40000 = 40000 + 10000 = ₹ 50000$
According to the question, the state of the shopkeeper and consumer is the same i.e., Tamil Nadu that is why it is an intrastate sale due to which the tax will be given by the shopkeeper as the Central Goods and Services Tax (CGST)% and State Goods and Services Tax (SGST)% to the Central and State Government respectively.
∴ $C G S T % = S G S T % = \frac{G S T %}{2}$
$= \frac{18}{2} = 9 %$
The amount of SGST and CGST collected by the shopkeeper from the consumer is the output SGST and CGST of the shopkeeper.
$S G S T o f s h o p k e e p e r = C G S T o f s h o p k e e p e r = S G S T % o f S P_{2}$
$= \frac{9}{100} \times 50000 = ₹ 4500$
Step 4: Find the amount of tax paid to the State Government by the shopkeeper
(ii) Amount of the output GST of the shopkeeper, $S G S T = C G S T = ₹ 4500$
As the IGST is paid by the wholesaler (last seller of interstate sale) to the Central Government for the interstate sale with the shopkeeper, set off input IGST $₹ 7200$ against the output CGST of the shopkeeper $₹ 4500$ i.e., $(7200 - 4500) = ₹ 2700$
Here, $₹ 2700$ is the balanced Input IGST.
Tax paid by the shopkeeper as SGST to Tamil Nadu Government
$= O u t p u t S G S T o f s h o p k e e p e r - B a l a n c e d I n p u t I G S T$
$= 4500 - 2700 = ₹ 1800$
Step 5: Find the tax received by the West Bengal Government
(iii) According to the question, the sale is intrastate between the shopkeeper and the consumer .ie., inside Tamil Nadu so tax will be paid to the Tamil Nadu Government by the shopkeeper as SGST. Moreover, IGST is collected by the Central Government. This means that no tax will be paid to the State Government of the wholesaler i.e, West Bengal Government for the sale of the bullet bike at any time.
Step 6: Find the tax received by the Central Government
(iv) Tax received by the Central Government $= I G S T p a i d b y t h e w h o l e s a l e r + O u t p u t C G S T o f t h e s h o p k e e p e r$
$= 7200 + Nil = ₹ 7200$
Step 7: Find the amount paid by the consumer
(v) Amount paid by the consumer = $S P_{2} + O u t p u t S G S T + O u t p u t C G S T$
$= 50000 + 9000 + Nil = ₹ 59000$
Final Answer:
(i) The price of the bullet bike paid by the shopkeeper (including IGST) is ₹ 47200.
(ii) The amount of tax paid by the shopkeeper tax to the Central Government is ₹ Nil.
(iii) The amount of tax paid to the West Bengal Government is ₹ Nil.
(iv) The amount of tax received by the Central Government as tax is ₹ 7200.
(v) the amount paid by the consumer for the bullet bike is ₹ 59000.

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