Question

Let $A , B$ and $C$ be three traders belonging to different states. Trader A sells some goods/services to trader B for $₹ 500$ and trader B sells the same goods/services to trader $C$ at a profit of $₹ 200$. Calculate the tax liability of $B$, if the rate of GST is $12 \%$.

• A. $₹ 20$
• B. $₹ 15$
• C. $₹ 34$
• D. ₹ 24

Answer 1

Answer: (D)

It is a case of inter-state-transaction.
For trader A: S.P. $=₹ 500$
IGST $=12 \%$ of $₹ 500=\frac{12}{100} \times ₹ 500=₹ 60$
For trader B: C.P. $=₹ 500$
S.P. $=₹ 500+₹ 200=₹ 700$
C.P. $=₹ 500$ and profit of $₹ 200$
Input-tax credit (ITC) = Tax on purchase of goods/ services (input-tax)
Tax liability on trader B = Output tax - Input-tax credit
$=₹ 84-₹ 60=₹ 24$