Simple Problems

Calculation of GST can be done in two ways. 

1. When the final price of a product is not determined: Under this circumstance, the supplier has to first determine the taxable value of the product and then charge GST on it. Example, if a dealer is selling a product for Rs. 2,000/- (excluding GST) attracting GST @ 5%. Then the invoice value will be Rs. 2,000 + GST (5% of Rs. 2,000)

= Rs. 2,000 + Rs. 100

= Rs. 2,100/-.

2. When the final / maximum price (MRP) of a product is determined: Here, there is a maximum price already determined by the marketer / manufacturer and this price already covers the GST component. Example, a big packet of Oreo Biscuits may cost Rs. 100/- (MRP, which is inclusive of GST @ 18%). Here, the amount of GST will be Rs. 15.25/-. Shocked?

Here is the calculation!

Rs. 100 is inclusive of product's sale value and GST. If we consider the sale value as 100 and GST as 18, we get a total of 118. This value represents the MRP of the product. 

So, if 118 = Rs. 100

then, 18 = ????

This will be 100 X 18 / 118 = Rs. 15.25/-.

Basic Ratio and Proportion!