Chapter 7. Comparison between pre and post GST scenarios

Illustrated with an example of supply chain, consisting Manufacturer, Wholesaler, Retailer and Customer, showing the impact with and without GST:-

Suppose, manufacturer, started production for one item (say, one Dress), he had all the necessary things to manufacture dress. Now, Manufacturer must be having certain people known as wholesalers and further wholesalers will have retailers, so that item reaches to the end users (customers).


Following shown, the cost of saving by customer on one item after implementing GST:-

Case 1: Manufacturer to Wholesaler

ParticularsWithout GSTWith GST
Cost of Production100100
Add:- Manufacturer Profit Margin100100
Manufacturer Price200200
Add:- Excise Duty (12%)24
Total 224200
Add:- VAT@12.5%28
Add:- CGST@12.525
Add:- SGST@12.5%25
Invoice Value252250


Case 2: Wholesaler to Retailer:-

ParticularsWithout GSTWith GST
Cost of Goods to Wholesaler224200
Add:- Profit Margin @ 10%22.420
Add:- VAT@12.5%30.8
Add:- CGST@12.527.5
Add:- SGST@12.5%27.5
Invoice Value277.2275


Case 3: Retailer to Consumer:-

ParticularsWithout GSTWith GST
Cost of Goods to Retailers246.4220
Add:- Profit Margin @ 10%24.6422
Total Value271.04242
Add:- VAT@12.5%33.88
Add:- CGST@12.530.25
Add:- SGST@12.5%30.25
Total Price of item that reaches to customer304.92302.5
Cost Saving (in Rs)2.42

From the above example it is clear, that on one item, customer save Rs 2.42, on applying GST, while if we wish to continue with current taxation system, then not a single penny is saved by consumer.