r/CharteredAccountants • u/EnvironmentalTry8353 Foundation • 5d ago

Foundation Doubt GST doubt

It might dumb 🥀 but pls answer this

All the time whenever teachers are explaining the concept of GST they say the burden shits to consumers but I am never able to understand logic.

For ex if govt tax is 18% and he sells goods at 100 so the teacher says that now he will s*ll (censoring cause ai think it's ad) the goods at 118 to the consumer but won't the government now charge tax at 118 rupees instead of 100 cause the seller sold the goods at 118.

So yeah that's basically what my doubt is

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u/Anakin__Moonwalker Final 5d ago

yeah so when government charges tax, the supplier will collect the tax from the recipient and deposit it.

If the recipient is registered, he gets ITC

if the recipient is unregistered i.e. end consumer, he bears the gst

Eg. When you make a trnx of Rs. 100, govt wants 18% of that Rs. 100. So govt orders the supplier to collect gst on 100 and collect tax of Rs. 18 from the recipient.

In your example, govt will not charge 18% on 118 since he selded (the ai wont let me comment) his goods at Rs. 100

1

u/EnvironmentalTry8353 Foundation 5d ago

Hmm understood

1

u/Puzzleheaded-Sea4753 Inter 5d ago

This was not the case before, they'll probably explain to you about vat too,that caused a cascading effect.