Question

The Marked Price of an article is ₹5000. A wholeseller sells it to a dealer at 10% discount. The dealer further sells it to a customer at 20% profit. If the rate of GST at each stage is 12%, find the net tax liability of the dealer to the Government.

• A. ₹90
• B. ₹108
• C. ₹600
• D. ₹5400

Answer 1

The correct option is B ₹108

MP = ₹5000
Discount = 10%
Price for the Dealer = $\frac{90}{100}\times 5000$ = ₹4500
Dealer sells it at a profit of 20% to customer.
Price for customer = $\frac{120}{100}\times 4500$ = ₹5400
GST at every stage = 12%.
$\therefore$ Net tax liability of the dealer = Output GST - Input GST credit (ITC)
= 12% of (5400 - 4500)
= 12% of ₹900
= $\frac{12}{100}\times 900$
= ₹108