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GST on Profit or Total Sales Value?, Goods and Services Tax - GST

Issue Id: - 118403
Dated: 4-3-2023
By:- lakhya phukan
GST on Profit or Total Sales Value?

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Say, I bought an item from a whole seller at 5% GST. Total value was Rs. 105. So my input tax credit is Rs. 5. So if I sell the item for Rs. 190, then do I calculate the GST on 190 - 105 = 85 or on total sales values of Rs. 190? My GST rate is also 5%.

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Showing Replies 1 to 7 of 7 Records

1 Dated: 4-3-2023
By:- Shilpi Jain

You would have to mention GST on Rs. 190 in the invoice. However, while you are paying to the Govt. you end up paying on the margin only since the GST you already paid on your purchase can be set off. That is called input tax credit

2 Dated: 4-3-2023
By:- lakhya phukan

So I have to deduct the input tax credit (which is Rs. 5) from the GST on Rs. 190?

3 Dated: 5-3-2023

NO. You are to pay GST on Rs.190/-. i.e. taxable value.

4 Dated: 9-3-2023
By:- Shilpi Jain

So while filing returns you will actually pay gst on entire 190 but deposit in the cash ledger will be the amount of gst after reducing rs 5 itc.

5 Dated: 10-3-2023

Assuming Rs.190 is your selling price the Margin would be ( 190-100) Rs.90 on which the net effect of GST will Operate. Your cost Rs ( 100+ 5) inclusive of ITC and your Selling price ( 190+5%) =199.5. The resultant tax liability will be equal to ( 9.5 - 5)= 4.5 which is 5% on your Margin that is Rs.90

6 Dated: 14-3-2023
By:- Nikita Rai

GST is a tax on the value addition of goods or services. It is calculated on the selling price of goods or services, which includes the profit margin. The GST payable is calculated by multiplying the taxable value of the supply with the applicable GST rates. Therefore, GST is applicable on the total sales value, which includes the profit margin.

7 Dated: 16-3-2023
By:- Padmanathan Kollengode

You have to collect GST from customer at 5% on Rs.190 i.e. Rs. 9.5. On the other hand, if Rs.190 is inclusive of tax, then tax will be Rs.9.04 (190*5/105) (see Rule 35 of CGST Rules).

However, while paying GST to Govt u need to pay only OPT-IPT ie. 9.5 or 9.04 - 5 = 4.5 or 4.04.


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