📚 Part of: Ancient Indian Civilizations And Modern Banking Mcq Quiz

The tax invoice of a telecom service in Manipur shows cost of services provided by it as Rs. 750. If the GST rate is 18%, find the amount of bill.

Category: Miscellaneous Indian Gk

Correct Answer: A) Rs. 885.

Exam Relevance: UPSC, SSC, Banking Exams, State PSC

Difficulty: Easy

Concept notes:

Goods and Services Tax (GST) is a value-added tax levied on most goods and services sold for domestic consumption in India. The tax is levied at each stage of the supply chain, and the final consumer bears the tax. The GST rate varies depending on the type of goods or services. In this case, the GST rate is 18%.

Common Mistakes:
  • Forgetting to add the GST to the base cost.
  • Misunderstanding the concept of GST and how it is applied to the cost of services.
  • Incorrectly calculating the percentage of GST.
Explanation:

Goods and Services Tax (GST) is a comprehensive indirect tax levied on the supply of goods and services in India. It is a single tax that replaces multiple indirect taxes that were previously levied by the central and state governments. The GST rate varies depending on the type of goods or services, and in this case, the GST rate is 18%.

To calculate the total bill amount, we need to add the GST to the cost of the services. The cost of the services provided by the telecom service in Manipur is Rs. 750. The GST rate is 18%, which means that 18% of the cost of the services is added as tax.

The calculation for the GST amount is as follows:

\[ \text{GST Amount} = \text{Cost of Services} \times \text{GST Rate} \]

\[ \text{GST Amount} = 750 \times 0.18 \]

\[ \text{GST Amount} = 135 \]

The total bill amount is the sum of the cost of services and the GST amount:

\[ \text{Total Bill Amount} = \text{Cost of Services} + \text{GST Amount} \]

\[ \text{Total Bill Amount} = 750 + 135 \]

\[ \text{Total Bill Amount} = 885 \]

Therefore, the total bill amount is Rs. 885. This is the correct answer because it includes both the cost of the services and the applicable GST.

It is important to understand that the GST is a value-added tax, meaning it is levied at each stage of the supply chain. However, in this context, we are only concerned with the final amount that the consumer pays, which includes the GST on the cost of services.

The other options are incorrect because they do not correctly account for the GST. Option B (Rs. 750) is the cost of services before GST, Option C (Rs. 855) and Option D (Rs. 850) are incorrect calculations of the total bill amount.

Option Analysis:
  • Option A: This option is correct. The GST of 18% on Rs. 750 is calculated as 750 * 0.18 = Rs. 135. Adding this to the original cost of Rs. 750 gives a total bill amount of Rs. 885.
  • Option B: This option is incorrect. Rs. 750 is the cost of the services before GST is applied. The total bill amount must include the GST, which is 18% of Rs. 750.
  • Option C: This option is incorrect. Rs. 855 is not the correct total bill amount. The GST of 18% on Rs. 750 is Rs. 135, and adding this to Rs. 750 gives Rs. 885, not Rs. 855.
  • Option D: This option is incorrect. Rs. 850 is not the correct total bill amount. The GST of 18% on Rs. 750 is Rs. 135, and adding this to Rs. 750 gives Rs. 885, not Rs. 850.

Mnemonic: GST = Goods and Services Tax

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