Assume that a manufacturer buys raw materials of ₹40 for making a sandwhich. He also adds ₹10 as the cost incurred on hiring waiters. Before selling, he levies 5% GST.
Calculate the final selling price.

₹55

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₹52.5

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₹50.5

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₹42

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Solution

The correct option is C ₹50.5
The GST is imposed on the value added on the product. It is not added on the entire cost of the product.

Cost price 40
(+) Cost 10
(=) Value of output 50
(+) Taxes @5% on ₹10 0.5
(=) Selling price 50.5

Hence, the introduction of GST has reduced the final cost of certain goods.

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