Important Terms :

1. Direct Taxes are those that are levied on the income of individuals or organisations. They
include income tax and corporate tax.
2. Indirect taxes are those that are paid by consumers or organisations when they buy goods
or services or both.
3. A dealer is a person who buys goods/services for re-sale.
4. The price at which a trader buys his goods is termed as cost price (C.P) or basic price.
5. The price marked on the commodity is called marked price (M.P). List price is also known
as marked price, printed price, quoted price, etc.
6. In order to sell out the old stock or for some other reason shopkeepers offer certain
percentage of the list price as discount. This discount is always calculated on list price.
7. Selling price (S.P) at which a trader sells his goods with discount, if any Selling price is also
called sale price.
Selling price = List price – Discount = Discounted price
When an article is sold without any discount its selling price = list price
8. Tax = Rate of tax × Selling price Goods and Services Tax (GST)

 GST is a consumption based tax which is levied when one buys/transfers goods or services
or both.
 GST is to be levied at every point of sale/transfer of goods or services or both.
 GST has replaced all former indirect taxes levied by central and state governments.
 GST is applicable throughout India except in the state of Jammu and Kashmir.

Important:
 A consumer (end user) cannot claim the GST paid by him.
 Only a person or an organization registered with GST can charge and collect GST on
sale/transfer of goods and services.
 Anyone who charges GST has to mention the GST registration number on the bill.
 GST is applicable on every type of movement of goods/services.

 GST includes of :
1. Central-GST (CGST) which is collected by the central government for the intra-state
transaction or movement of goods and services whereas CGST, the beneficiary is the central
government.
2. State-GST (SGST)/Union territory GST (UGST) which is collected by the state
government/union territory for the intra-state/union territory transaction or movement of
goods and services. Whereas UGST the beneficiary is the union territory government.
3. Integrated-GST (IGST) which is levied by the central government for inter-state transaction
or movement (including imports) of goods and services.

NOTE:
 In case of intra-state transaction, the seller collects both CGST and SGST form the buyer
and deposits the CGST with the central government and the SGST with the state
government.
 The tax collected on the intra-state movement of goods and services is to be shared
equally by the central government and the state government.
 The rates of GST are 0%, 5%, 12%, 18% and 28% as applicable.
 GST is calculated on sale price obtained after deducting discount, if any from the list price.
 In case of intra-state sale of goods/services or both If GST rate is 18% then CGST = 9% of
sale price, SGST = 9% of sale price, IGST = 0
 In case of inter-state sale of goods or services or both If GST rate is 18% then IGST = 18% of
sale price
 Discount is never allowed on amount including GST.

Input Tax Credit (ITC)

 Input tax credit means that while paying tax on sale (output) of goods and services you can
avail the tax you have already paid on the purchase (input) of the above goods/services and
pay only the balance amount as tax.
 Input-tax credit can be availed only on goods/services for business purposes.

NOTE:
1. Input tax includes CGST/SGST/IGST paid on input goods, input services, etc.
2. Only a registered person is entitled to take credit of input tax charged on supply of
goods/services.
3. Credit of tax paid on every input used for supply of taxable goods or services or both is
allowed under GST.
4. For the purchase of petroleum products, liquor, petrol, diesel, motor spirit, etc input tax
credit is not available.
5. In exports of goods/services, GST is not payable, but still input tax credit is available. Such
transactions are called zero-rated transactions in GST.

Importand Questions:

1.
Shopkeeper bought an article with market price 1200 from the wholesaler at a discount of
10%. The shopkeeper sells this article to the customer on the market price printed on it. If
the rate of GST is 6%, then find:
(i) GST paid by the shopkeeper to the Government.
(ii) Amount paid by the customer to buy the item.
2.

3.
4.

5.

6. A shopkeeper buy goods worth ₹ 4000 and sells these at a profit of 20% to a consumer in the
same state. If GST is charged at 5%, find:

(i) the selling price (excluding tax) of the goods.

(ii) CGST paid by the consumer.
(iii) SGST paid by the consumer.
(iv) the total amount paid by the consumer.

7. A shopkeeper buys an article from a wholesaler for ₹ 20000 and sells it to consumer at 10%
profit. If the rate of GST is 12%, find the tax liability of the shopkeeper.

8. A manufacture sells a T.V to a dealer for Rs.18000 and the dealer sells it to a consumer at a
profit of Rs 1500. If the sales are intra state and the rate of G.S.T is 12 %, Find:

(i) The amount of GST paid by the dealer to the State Government.
(ii) The amount of GST received by the Central Government.
(iii) The amount of GST received by the State Government.
(iv) The amount that the consumer pays for the TV.
9. A dealer buys an article at a discount of 30% from the wholesaler, the marked price
being Rs 6000. The dealer sells it to a consumer at a discount of 10% on the marked price.
If the sales are intra-state and the rate of GST is 5%. Find:
(i) The amount paid by the consumer for the article.
(ii) The tax (under GST) paid by the dealer to the State Government.
(iii) The amount of tax (under GST) received by the Central Government.

10. A dealer in Delhi buys an article for ₹16000 from a wholesaler in Delhi. He sells the article to a
consumer in Rajasthan at a profit of 25%. If rate of GST is 5%, find:

(i) the tax (under GST) paid by the wholesaler to Government.

(ii) the tax (under GST) paid by the dealer to the Government.
(iii) the amount which the consumer pay for the article.