Smt. Malhotra purchased solar panels for the taxable value of Rs.85000. She sold them for Rs.90000. The rate of GST is 5%. Find the ITC of Smt. Malhotra. What is the amount of GST payable by her?

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Rs. 250

Rs. 350

Rs.450

Rs. 550

answer is A.

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Detailed Solution

Concept-
The solar panels' taxable purchase price is

Rs . 85000 .

GST for the solar panels is set at

5 %

Now that the total input tax credit equals the amount of GST paid on the good, the input tax credit (ITC) will be equal to

5 %

of the amount of

Rs . 85, 000 (\frac{5}{100} x 85, 000 =

Rs. 4250).
Now that the solar panels are for sale, their price is

Rs . 90, 000 .

Consequently, the production tax on the solar panels will be 5% of Rs. 90000, or =

\frac{5}{100}

x Rs. 90000 = Rs. 4500.
The difference between the output tax and the input tax, or the GST due amount, will now be equal to

= OTC - ITC = Rs . 4500 - Rs . 4250 = Rs . 250 .

The ITC paid for the solar panels by Smt. Malhotra is therefore Rs. 4250, and the GST paid on the solar panels is Rs. 250, making the answer "Rs. 250" the correct one.
Thus, the amount of ITC is Rs 4,250 and the amount of GST payable by Smt. Malhotra is Rs 250.
Hence, option 1 is correct.

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