A composition trader buys inventory for ₹3,00,000 plus ₹36,000 of GST that cannot be recovered. The trader adds a 40% markup to the total purchase cost and sells all the inventory as taxable…
Question and options
A composition trader buys inventory for ₹3,00,000 plus ₹36,000 of GST that cannot be recovered. The trader adds a 40% markup to the total purchase cost and sells all the inventory as taxable supplies in the same state. If the combined composition rate on taxable turnover is 1%, what tax is payable?
₹4,704
₹4,200
₹6,000
₹3,360
Answer and explanation
A composition trader cannot take input tax credit, so the ₹36,000 of GST is part of cost: ₹3,36,000 plus a 40% markup gives a turnover of ₹4,70,400. Tax at the combined 1% under section 10 of the CGST Act, 2017 and Rule 7 is ₹4,704. Leaving the GST out of cost gives ₹4,200.
Practice for these exams
-
All India Bar Examination (AIBE)
Subject revision
See pack details on LawMint.net -
IIT Kharagpur LL.M. Entrance
Subject revision
See pack details on LawMint.net -
CLAT PG
Subject revision for a passage-based exam
-
AILET PG
Subject revision
Related exam syllabi
More solved explanations in GST - levy, supply, input tax credit, registration & returns
- A person is arrested under section 69 of the CGST Act, 2017 for an offence under section 132 that is not one of those specified in section 132(5), and so is…
- Which form is the monthly GST return for a registered person required to deduct tax under Section 51?
- By when must an e-commerce operator pay the tax it collected at source in a month and furnish its monthly statement under Section 52 of the CGST Act, 2017,…
- Under Section 69(2) of the CGST Act, what is the period for producing a person before a magistrate after an arrest for a Section 132(5) offence?
- Mr. Manjot is a trader supplying goods from his M/s Singh Traders. The office of the firm is located in Delhi whereas its godowns are located in the State of Uttar…