Manufacturer Anshul sells a LG freeze to a dealer Lalit for $₹ 12500$ . The dealer Lalit sells it to a consumer at a profit of $₹ 1500$ . If the sales are intra state and the rate of GST is $12 %$ , find
(i) the amount of tax (under GST), paid by the dealer Lalit to the Central Government.
(ii) how much is the tax amount (under GST) received by the State Government?
(iii) the amount that the consumer pays for the LG Freeze.

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Solution

Step 1: Calculate the price at which the dealer Lalit sells the freeze to a consumer
Given, the Goods and Service Tax (GST) rate $= 12 %$
Profit earned by Lalit $= ₹ 1500$
Cost Price of Lalit $= ₹ 12500$
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.
∴ $C G S T % = S G S T % = \frac{G S T %}{2}$
$= \frac{12}{2} = 6 %$
Now, the amount of SGST and CGST collected by the manufacturer Anshul from the dealer Lalit is the input SGST and CGST of Lalit.
$I n p u t S G S T = I n p u t C G S T = S G S T % o f C o s t P r i c e o f L a l i t$
$= \frac{6}{100} \times 12500 = ₹ 750$
As dealer Lalit sells it at a profit of $₹ 1500$
∴ $S e l l i n g P r i c e o f L a l i t = C o s t P r i c e o f L a l i t + P r o f i t$
$= 12500 + 1500 = ₹ 14000$
Step 2: Calculate the tax paid by the dealer Lalit
(i) Now, the amount of SGST and CGST collected by the dealer Lalit from a consumer is the output SGST and output CGST of Lalit.
$O u t p u t S G S T = O u t p u t C G S T = S G S T % o f S e l l i n g P r i c e o f L a l i t$
$= \frac{6}{100} \times 14000 = ₹ 840$
$T a x p a i d b y t h e d e a l e r L a l i t t o t h e C e n t r a l G o v e r n m e n t (u n d e r G S T)$
$= O u t p u t C G S T - I n p u t C G S T$
$= 840 - 750 = ₹ 90$
Step 3: Find the tax received by the State Government
(ii) As we know that the value of CGST and SGST is equal in the case of intrastate sale
∴ $T a x p a i d b y L a l i t t o S t a t e G o v e r n m e n t (u n d e r G S T) = T a x p a i d b y L a l i t t o C e n t r a l G o v e r n m e n t (u n d e r G S T) = ₹ 90$
Hence, the amount of tax paid by Lalit as State Goods and Services Tax is $₹ 90$ .
Step 4: Find the amount paid by the consumer to the dealer Lalit
(iii) $A m o u n t p a i d b y t h e c o n s u m e r t o L a l i t = S e l l i n g P r i c e o f L a l i t + O u t p u t C G S T + O u t p u t S G S T$
$= 14000 + 840 + 840 = ₹ 15680$
Final Answer:
(i) The amount of tax paid by Lalit as Central Goods and Services Tax is $₹ 90$ .
(ii) The amount of tax paid by Lalit as State Goods and Services Tax to the State Government is $₹ 90$ .
(iii) The consumer paid $₹ 15680$ to the dealer Lalit.

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