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in Goods and Service Tax (GST) by (53.6k points)

Under GST, how is value addition taxed? Explain with the help of an illustration.

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GST is a tax levied on every stage of sales and is a legal extension Of VAT. In other words, GST is a tax on goods and services under which every person is liable to pay tax on his output and is entitled to get input tax credit on the tax paid on its inputs (therefore tax on value addition only), and ultimately the final consumer shall bear the tax. 

For example : 

Mahesh buys some goods or services worth ₹ 8000 and sells them to Hemant for ₹ 14,000. So, value added by him is ₹ 6000 and he has to pay tax on this. Suppose, CGST is @ 12% and SGST is @ 6%. 

(1) On the goods or services bought by Mahesh, input tax credit for CGST and SGST will be :

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