The MP of an article = ₹900 and rate of GST on it is 18%. A shopkeeper buys this article at a reduced price and sells it at its marked price. If the shopkeeper pays ₹16.2 as CGST to the government as part of his net tax liability, find the amount (exclusive of GST) paid by the shopkeeper.

₹700

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₹720

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₹740

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₹760

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Solution

The correct option is B ₹720
Let the shopkeeper buy the article at ₹x
For him CP = ₹x and SP = ₹900
Net CGST paid to the government = ₹16.2, hence
Net SGST paid to the government = ₹16.2
So, total GST paid = ₹16.2 + ₹16.2 = ₹32.4
GST on Output - GST on Input = ₹32.4
$\Rightarrow$ 18% of ₹900 - 18% of ₹x = ₹32.4
$\Rightarrow$ $\frac{18 x}{100}$ = ₹ 162 - ₹32.4 = ₹129.6
$\Rightarrow$ x = ₹720

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