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Question

The goods and services tax is imposed on at each stage of the supply chain.

A
value of output
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B
value addition
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C
final price
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D
MRP
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Solution

The correct option is B value addition
The goods and services tax is imposed only on the value added at each stage. There is no tax paid by the manufacturer or retailer. This in turn reduced the prices of goods and services. In the example below, the GST is charged on ₹9 and not on ₹120.

Cost price 111
(+) Cost 9
(=) Value of output 120
(+) Taxes @ 10% on ₹9 0.9
(=) Selling price 120.9

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