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
$=₹84-₹60=₹24$