Goods and Services Tax — Part 2: Input tax credit, the supply chain and reverse problems: visual lesson, ICSE Class 10 Mathematics

Lesson

Goods and Services Tax, Part 2: who pays what

Tax is collected at every sale, yet the consumer bears it all.

In this lesson you will

Find the GST each dealer pays using input tax credit
Combine GST with profit, loss, marked price and discount
Show that the total tax to the government equals the tax paid by the consumer
Work backwards to find a price, a rate of GST, a list price or a rate of discount

$540 + 108 + 108 = 756$: the payments add up to the consumer's tax.

Concept

Concept

A dealer pays GST when it buys (input tax) and collects GST when it sells (output tax). It hands over only the difference.

\text{net GST payable} = \text{output tax} - \text{input tax}

Input tax credit: pay only the difference.