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Question
Suppose you run a textile company in Chennai, Tamil Nadu. You buy raw materials worth ₹50,000 from Salem, Tamil Nadu. After processing, you export the final products worth ₹ 1,00,000 to Mumbai. Analyse the goods and services tax that would be paid.
Suppose you run a textile company in Chennai, Tamil Nadu. You buy raw materials worth ₹50,000 from Salem, Tamil Nadu. After processing, you export the final products worth ₹ 1,00,000 to Mumbai. Analyse the goods and services tax that would be paid.
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Solution
The correct option is D IGST on ₹1,00,000
The goods and services tax is collected based on the trade of goods and services across state borders. When goods and services are traded within a state or union territory, it is known as intrastate trade. On this, the central government imposes a Central Goods and Services Tax or CGST and the state government imposes the State Goods and Services Tax or SGST. When goods and services are traded between two states, it is known as interstate trade. In this case, the central government imposes and collects Integrated Goods and Services Tax or the IGST.
The goods and services tax is collected based on the trade of goods and services across state borders. When goods and services are traded within a state or union territory, it is known as intrastate trade. On this, the central government imposes a Central Goods and Services Tax or CGST and the state government imposes the State Goods and Services Tax or SGST. When goods and services are traded between two states, it is known as interstate trade. In this case, the central government imposes and collects Integrated Goods and Services Tax or the IGST.
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