Normally how GST is calculated :-
Persona ‘A’ (supplier) sell in 118/- to Person ‘B’ (intermediator/trader) who further add his margin of rupees 32/- this margin includes output GST and sell in (118+32) 150/- to final consumer. Now person ‘B’ will calculate GST @ 18% on 150/- that will come 27/- so Person ‘B’ will only pay Rs 9/- and the reaming 18/- is already paid by person ‘A’ and will show as Input tax credit against person ‘B’ GSTIN ?
But during all this process the % of GST was calculated by Person ‘B’ on the figure on which GST was already added by previous party ‘Person A’.
So with above situation government is getting 18% GST on 150/- price instead of price before GST
Person ‘A’ 100/- [before GST is 100 and after GST is 118]
Person ‘B’ 26.24/- [this 26.24 is margin of person ‘B’ before output GST] so 32 include output GST
Total of Before GST from person ‘A’ + Person ‘B’
100+26.24= 126.24/-
18% of 126.24 is = 22.7 this means that ‘Person B’ should give 22.7-18 = 4.7 as output tax rather than 9 rupees.
I hope you understand my question.
CAclubindia
