Q.A registered dealer in Andhra Pradesh buys raw material for ₹50,000 and pays GST at 18% on the purchase. The dealer processes the material and sells the finished goods for ₹80,000, charging GST at 18% on the sale. Compute the dealer's input tax, output tax, and the net GST actually payable to the government.

The dealer's output tax on the sale can be reduced by the input tax already paid on the purchase, through Input Tax Credit, leaving only the net difference payable.

Step 1 — Compute Input Tax. Input tax = 18% of the purchase value = ₹50,000 × 18% = ₹9,000. This is the GST the dealer has already paid to its own supplier.

Step 2 — Compute Output Tax. Output tax = 18% of the sale value = ₹80,000 × 18% = ₹14,400. This is the GST the dealer collects from its own customer.

Step 3 — Apply Input Tax Credit. Net GST payable to the government = Output Tax − Input Tax Credit = ₹14,400 − ₹9,000 = ₹5,400. …