Question 10 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: Goods worth ₹ 10,000 is sold by a Manufacturer 1 in Maharashtra to a Dealer A in Maharastra.

Correct Answer

Nature of Transaction: Intra-state (within Maharashtra)

Applicable Taxes: Since the transaction takes place within the same state (Maharashtra to Maharashtra), CGST and SGST will be applicable. IGST is NOT applicable as it is charged only on transfer of goods and services from one state to another.

Calculation:

  • Value of Goods: ₹ 10,000
  • CGST @ 9%: ₹ 10,000×9000 \times 9% = ₹ 900 (goes to Central Government)
  • SGST @ 9%: ₹ 10,000×9000 \times 9% = ₹ 900 (goes to Maharashtra State Government)
  • Total GST: ₹ 900 + ₹ 900 = ₹ 1,800
Exercise: Do it yourself | Q: 1 | (Page 16)
For More Understanding

Explanation

This is an intra-state transaction where both the supplier (Manufacturer 1) and the recipient (Dealer A) are located in Maharashtra. As per the GST framework explained in the context, intra-state transactions attract both CGST (Central Goods and Services Tax) and SGST (State Goods and Services Tax) simultaneously on the common tax base. The context clearly states that IGST is charged only on inter-state transfers. The example in the textbook shows that for a transaction worth ₹10,000 within Punjab at 18% GST rate, CGST of 9% (₹900) goes to Central Government and SGST of 9% (₹900) goes to the State Government.

Solution Steps

  1. Step 1: Identify the nature of transaction - Manufacturer in Maharashtra selling to Dealer in Maharashtra = Intra-state transaction

  2. Step 2: Determine applicable taxes - For intra-state transactions, CGST and SGST apply (not IGST)

  3. Step 3: Calculate CGST = ₹ 10,000×9000 \times 9% = ₹ 900

  4. Step 4: Calculate SGST = ₹ 10,000×9000 \times 9% = ₹ 900

  5. Step 5: Total GST = CGST + SGST = ₹ 1,800

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