Question

The printed price of a washing machine is $₹40000$. A wholesaler in Chattisgarh buys the washing machine from a manufacturer in Delhi at a discount of $10\%$ on the printed price. The wholesaler sells the washing machine to a retailer in Haryana at 5% above the printed price. If the rate of GST on the washing machine is $18\%$, find
(i) the amount inclusive of tax (under GST) paid by the wholesaler for the washing machine.
(ii) the amount inclusive of tax (under GST) paid by the retailer for the washing machine.
(iii) the amount of tax (under GST) paid by the wholesaler to the Central Government.
(iv) the amount of tax (under GST) received by the Central Government.

Answer 1

Step 1: Given data

Printed Price, $P=₹40000$

Rate of discount by the manufacturer, $d\%=10\%onP$

Selling Price of the wholesaler, $S{P}_2=5\%aboveP$

Goods and Services Tax, $GST\%=18\%$

Step 2: Find the amount paid by the wholesaler to the manufacturer

(i) According to the question, the manufacturer and wholesaler are from different states due to which they have to pay Integrated Goods and Services Tax (IGST) to the Central government as it is applied to interstate sales of goods and services and $\mathit{I}\mathit{G}\mathit{S}\mathit{T}\mathbf{}\mathbf{\%}\mathbf{}\mathbf{=}\mathbf{}\mathit{G}\mathit{S}\mathit{T}\mathbf{\%}$.

Selling Price of the manufacturer, $S{P}_1=P-d\%ofP$

$$\begin{gathered} =40000-\frac{10}{100}\times 40000 \\ =40000-4000 \\ =₹36000 \end{gathered}$$

The price paid by the wholesaler (including IGST) $=S{P}_1+IGST\%ofS{P}_1$

$$\begin{gathered} =36000+\frac{18}{100}\times 36000 \\ =36000+6480 \\ =₹42480 \end{gathered}$$

Step 3: Find the amount paid by the retailer to the wholesaler

(ii) Now, the wholesaler sells it to a retailer at $5\%$ above P.

∴ The Selling Price of the wholesaler, $S{P}_2=P+5\%ofP$

$$\begin{gathered} =40000+\frac{5}{100}\times 40000 \\ =40000+2000 \\ =₹42000 \end{gathered}$$

The price paid by the retailer (including IGST) $=S{P}_2+IGST\%ofS{P}_2$

$$\begin{gathered} =42000+\frac{18}{100}\times 42000 \\ =42000+7560 \\ =₹49560 \end{gathered}$$

Step 4: Find the tax paid by the wholesaler to the Central Government

(iii) According to the question, the sales are interstate from Chattisgarh to Delhi.

Here, Output IGST of the wholesaler is the tax collected by the wholesaler from the retailer and Here, Input IGST of the wholesaler is the tax amount paid by the wholesaler to the manufacturer.

∴ $Taxispaidbythewholesaler(lastsellerofinterstatesale)totheGovernmentasIGST$

$=OutputIGSTofthewholesaler-InputIGSTofthewholesaler$

$$\begin{gathered} =\frac{18}{100}\times 42000-\frac{18}{100}\times 36000 \\ =7560-6480 \\ =₹1080 \end{gathered}$$

Step 5: Find the tax received by the Central Government

(iv) As the tax collected as IGST is paid to the Central Government by the wholesaler (seller).

∴ Tax received by the Central Government $=OutputIGSTofthewholesaler$

$=IGST\%xS{P}_2$

$$\begin{gathered} =\frac{18}{100}\times 42000 \\ =₹7560 \end{gathered}$$

Final Answer:

(i) The price of the washing machine paid by the wholesaler (including IGST) is $\mathbf{₹}\mathbf{}\mathbf{42480}$.

(ii) The price of the washing machine paid by the retailer (including IGST) is $\mathbf{₹}\mathbf{}\mathbf{49560}$.

(iii) The amount of tax paid by the wholesaler to the Central Government is $\mathbf{₹}\mathbf{}\mathbf{1080}$.

(iv) The amount of tax received by the Central Government as tax is $\mathbf{₹}\mathbf{}\mathbf{7560}$.