CMA Intermediate · Direct and Indirect Taxation · Concept of Indirect Taxes
A manufacturer incurs cost of ₹80,000 and adds profit of 25% on cost. GST at 12% is charged on the selling price. The tax is collected from the buyer and no input credit is available. What is the total amount paid by the buyer, and who bears the GST burden?
Selling price is ₹80,000 plus 25%, giving ₹1,00,000. GST at 12% adds ₹12,000, so the buyer pays ₹1,12,000. Since the manufacturer collects the tax on top of the price and deposits it, the burden rests on the buyer.
- A₹1,12,000; the manufacturer
- B₹1,12,000; the buyerCorrect
- C₹1,00,000; the buyer
- D₹1,20,000; the manufacturer
Explanation
Selling price = 80,000 × 1.25 = ₹1,00,000. GST = 12% × 1,00,000 = ₹12,000. Total = ₹1,12,000. As the tax is collected over the price, the buyer bears it. ₹1,00,000 omits the tax.
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