GST on Profit or Total Sales Value?

[lakhya phukan]

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%.

[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

[lakhya phukan]

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

[KASTURI SETHI]

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

[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.

[SIVARAMA KUMAR]

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

[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.

[Padmanathan KV]

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.

AI Summary

GST on Sales Value: output tax is charged on full selling price with input tax credit offsetting net liability.
GST is charged on the full selling price shown in the invoice; if price is tax-inclusive the tax component is apportioned per invoicing rules. Output tax shown on sales is reduced by allowable input tax credit for purchases, so the net cash tax equals output tax minus input tax credit, effectively taxing the value addition.