Query about profit under GST

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10 Points Posted on 05 January 2021
buying price 50.9
GST @ 12% 6.1
Net buying price 57

Transportation 2
total 59
GST @ 12% 7.1
Net selling price 66


Selling price 66
buying cost 57
transportation 2
Net payable GST 1.0
Gross margin 6.11

Why i am getting zero profit even if margin is coming 6.11??

(P.S - sorry for the way it is presented
it was in excel and i had to write it down)🙏
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On 05 January 2021 at 12:17 Report
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Quick Summary
This discussion clarifies a common confusion regarding profit calculation under the Goods and Services Tax (GST) regime. The user presented a scenario where a calculated margin seemed to disappear when accounting for GST, leading to zero profit. The explanation highlights that GST, when treated as an expense rather than a tax component, can distort profit calculations. The core issue is how GST is factored into the cost and selling price, impacting the final profit figure.

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378 Points Posted on 05 January 2021
Cost of purchase is 52.9(excluding taxes)
sales price is 59 (excluding taxes)
thus margin is6.1
1 Reply
On 05 January 2021 at 19:20
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10 Points Posted on 05 January 2021
But why profit is coming zero while calculating it
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On 05 January 2021 at 21:43
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378 Points Posted on 05 January 2021
As you have considered GST portion as expense which is incorrect
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On 05 January 2021 at 21:47
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10 Points Posted on 05 January 2021
Thank you so much😊
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On 05 January 2021 at 22:20

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