Question 11 of 23intermediate🔧 ApplyNumerical3 marks

State how the GST rates will be applicable if CGST is 9%, SGST is 9% and IGST 18% in each of the following situations: Dealer A sell goods worth ₹ 25,000 to Dealer B in Gujarat.

Correct Answer

Nature of Transaction: Inter-state Supply (Maharashtra to Gujarat)

Applicable Tax: Since the transaction involves sale of goods from one state (Maharashtra) to another state (Gujarat), IGST (Integrated Goods and Services Tax) is applicable.

Calculation:

  • Value of Goods: ₹ 25,000
  • IGST Rate: 18%
  • IGST Amount: ₹ 25,000×18000 \times 18% = ₹ 4,500

CGST and SGST are NOT applicable in this case as they are levied only on intra-state (within the same state) transactions.

Exercise: Do it yourself | Q: 2 | (Page 16)
For More Understanding

Explanation

According to the textbook context, IGST is charged on transfer of goods and services from one state to another. The context clearly states: 'IGST is charged on transfer of goods and services from one state to another' and provides the example of goods transferred from Madhya Pradesh to Rajasthan attracting IGST. In this question, Dealer A (from Maharashtra, as established in the previous part of the question) is selling to Dealer B in Gujarat, making this an inter-state transaction. Therefore, only IGST at 18% applies, not CGST and SGST which are for intra-state transactions within the same state.

Solution Steps

  1. Step 1: Identify the transaction type - Dealer A (Maharashtra) sells to Dealer B (Gujarat) = Inter-state transaction

  2. Step 2: Determine applicable GST - For inter-state supply, only IGST applies @ 18%

  3. Step 3: Calculate IGST - ₹ 25,000×18000 \times 18% = ₹ 4,500

  4. Step 4: Conclude - CGST (9%) and SGST (9%) are NOT applicable for inter-state transactions

PreviousNext