Question

The GST paid by a firm is usually greater or smaller than GST received from consumers?Could you give me a formal answer?

Answer 1

GST paid is less than GST received can be arise in following cases :

# Raw Material can be tax free or rate of tax is lower to the producer.

# Rate of tax of final product is in higher slab and parts for making finished product is in lower slab.

# Product to producer is in exemption but to consumer is not exempted. For eg unbrand products used as raw material and afterward sold then under a brand .hence GST levied on "Branded Products".

# Goods purchased by supplier is at lower cost and after adding profit margin in that cost GST Is charged. For example A (supplier) buy goods @ 100/- and pay gst 18% on 100/- . Afterwards , sold same goods without alteration by adding profit margin of 20/- in cost so value of goods become 120(100+20) and received GST on 120/- @18%.