Business StudiesCBSE Class 11 · Internal Trade

GST Class 11 Business Studies: CGST, SGST, IGST, Input Tax Credit and Cascading Effect Numericals

Updated 17 October 2026 · Fact-checked

GST (Goods and Services Tax) has applied since 1 July 2017 as "One Nation, One Tax": a destination-based tax on the supply of goods and services that replaced 17 indirect taxes and 23 cesses. CGST and SGST are charged on supplies within a state, and IGST on supplies between states. Input tax credit lets each trader deduct the tax paid on purchases, so only value addition is taxed and tax on tax is removed.

Each trader pays only tax on value added (GST on sales minus credit on purchases), so the total Rs 36 equals 18% of the final Rs 200.

Illustration drawn for QuestionBuddy.

Understand GST: CGST, SGST, IGST and Input Tax Credit with Numericals (CBSE 11)

Concept. GST was implemented from 1 July 2017 on the idea of "One Nation, One Tax". It is one tax collected where goods and services are finally consumed, charged on each supply along the chain from maker to buyer. It replaced 17 indirect taxes (8 central and 9 state) and 23 cesses, and created a unified national market.

Components. CGST (Central) and SGST (State) are charged together on supplies within a state; IGST is charged on supplies across states (and imports). At a given rate, intra-state CGST = SGST = half of the rate.

Key features.
1. Applies across the whole country.
2. Levied on the supply of goods or services.
3. A destination-based consumption tax: the state of consumption receives the tax.
4. Dual GST: Centre and states tax a common base.
5. Input tax credit (ITC) at every stage: tax paid on purchases is set off against tax on sales, so only value addition is taxed and the cascading effect (tax on tax) is removed.
6. Matching of invoices through the GST Network (GSTN) reduces evasion.
7. Anti-profiteering measures ensure tax benefits are passed on to consumers.

Benefits. Lower overall burden, no hidden taxes, a harmonised market, easier compliance, wider choice and more jobs.

Working.

GST on a sale = value of supply x rate.
Net GST payable = GST on sales - input tax credit (GST paid on purchases).
Total GST paid by all traders in the chain = rate x final price before tax; the consumer bears it.

Illustration (12%, intra-state). Manufacturer to wholesaler 50,000: GST 6,000; wholesaler to retailer 60,000: GST 7,200, net 1,200; retailer to consumer 75,000: GST 9,000, net 1,800. Total 9,000 = 12% of 75,000.

GST: CGST, SGST, IGST and Input Tax Credit with Numericals (CBSE 11): key facts

GST on a supply: GST = value of supply x rate / 100
intra-state CGST = SGST = GST / 2
inter-state IGST = GST; Value excludes the tax.
Net GST payable: net GST = GST on sales - input tax credit | input tax credit = GST paid on purchases; Taxes value addition only.
Total tax in the chain: sum of net GST paid by all traders = rate x final selling price | consumer bears it; Check this at the end.
Key facts: from 1 July 2017
replaced 17 taxes and 23 cesses
destination-based
dual GST
GSTN invoice matching; One Nation, One Tax.

How to answer GST: CGST, SGST, IGST and Input Tax Credit with Numericals (CBSE 11) questions

To solve a GST chain, treat each trader separately and then add.

1Write the value of each supply (without tax) and the rate.
2Compute GST charged = value x rate / 100 for each stage.
3For each trader net GST payable = GST charged - GST paid on his purchases (input tax credit).
4Add the net payments of all traders: the total equals the rate applied to the final selling price.
5For intra-state supplies split GST equally into CGST and SGST; for inter-state use IGST.

GST: CGST, SGST, IGST and Input Tax Credit with Numericals (CBSE 11) in real life

The idea, met in an everyday situation. Answer the question in your own words, then compare with the model answer. The one-line hook is what to remember.

Tax on tax before ITC

Suppose a bakery buys flour for 1,000 plus 10% tax, and sells bread for 1,500 plus 10% tax.

How much net tax does the bakery pay with input tax credit?

Try it first, then show the solutionSolution

Tax on sale = 10% of 1,500 = 150.
Credit for tax paid on flour = 10% of 1,000 = 100, so net = 150 - 100 = 50.

Answer: 50, the tax on its value addition of 500.

Memory hook: You pay tax only on the value you add.

Tricks to remember GST: CGST, SGST, IGST and Input Tax Credit with Numericals (CBSE 11)

Short memory aids. Say each one aloud once, then use it on a question the same day.

Dual means CGST plus SGST
Within a state both Centre and State tax; across states one IGST.
Use it when: Components.
Sales minus purchases
Net GST = tax on sales minus tax on purchases.
Use it when: Input tax credit.
Destination
The tax goes where the goods are consumed.
Use it when: Features.

GST: CGST, SGST, IGST and Input Tax Credit with Numericals (CBSE 11): solved examples

Ordered from board level to HOTS. Try each one before you open the solution.

Example 1: Inter-state supply · 1 mark · MCQBoard level

Which tax is charged on a supply of goods from one state to another?
(a) CGST
(b) SGST
(c) IGST
(d) Customs duty

Try it first, then show the solutionSolution

IGST is charged on supplies across states and on imports.

Answer: (c) IGST

Example 2: Key features of GST · 4 marks · Short answerBoard level

State any four key features of GST. (4 marks)

Try it first, then show the solutionSolution

It applies across the whole country and is levied on the supply of goods or services.
It is a destination-based consumption tax and a dual GST (Centre and states).
Input tax credit removes the cascading effect; GSTN invoice matching reduces evasion (any four features).

Answer: Whole-country application, supply-based levy, destination-based dual GST, input tax credit.

Example 3: A chain at 18% · 4 marks · Short answerHarder board level

A manufacturer sells goods to a wholesaler for 40,000, the wholesaler sells them to a retailer for 50,000, and the retailer sells them to a consumer for 65,000, all within one state and at 18% GST. Find the GST charged and the net GST paid by each trader, the CGST and SGST on the first sale, and the total GST borne by the consumer. (4 marks)

Try it first, then show the solutionSolution

Manufacturer: GST = 40,000 x 18% = 7,200 (CGST 3,600 and SGST 3,600); credit nil; net 7,200.
Wholesaler: GST = 50,000 x 18% = 9,000; credit 7,200; net 1,800.
Retailer: GST = 65,000 x 18% = 11,700; credit 9,000; net 2,700.
Total = 7,200 + 1,800 + 2,700 = 11,700 = 18% of 65,000; the consumer pays 65,000 + 11,700 = 76,700.

Answer: Net GST: 7,200; 1,800; 2,700. CGST 3,600 and SGST 3,600 on the first sale. Consumer bears 11,700 (pays 76,700).

Example 4: Inter-state sale · 5 marks · Case-basedHOTS / competency

Case: A wholesaler in Delhi sells goods worth 2,00,000 to a retailer in Jaipur at 12% GST. The retailer sells them to a consumer in Jaipur for 2,60,000. (5 marks)
(i) Which GST applies on the first sale, and how much? (2)
(ii) Find the retailer's net GST payable on the second sale, with CGST and SGST. (2)
(iii) Which feature explains that Rajasthan finally gets the revenue? (1)

Try it first, then show the solutionSolution

(i) The sale is across states, so IGST applies: 2,00,000 x 12% = 24,000.
(ii) The retailer's sale to the consumer is within Rajasthan: GST = 2,60,000 x 12% = 31,200 (CGST 15,600 and SGST 15,600). The retailer claims credit of the 24,000 IGST. IGST credit is set off first against CGST (15,600) and then against SGST (8,400). So net payable = 31,200 - 24,000 = 7,200, all of it SGST (7,200) and CGST nil.
(iii) GST is a destination-based consumption tax: the state of consumption gets the revenue.

Answer: (i) IGST of 24,000. (ii) Output tax 31,200 (CGST 15,600 + SGST 15,600). After IGST credit of 24,000 (15,600 against CGST and 8,400 against SGST), net payable is 7,200: CGST nil and SGST 7,200. (iii) Destination-based tax.

Example 5: Cascading effect · 4 marks · Short answerHarder board level

Seller A sells goods for 1,000 plus 10% tax. Trader B adds value of 500. With input tax credit, B sells for 1,500 plus 10% tax. Without credit, B adds A's tax of 100 to its cost, so its pre-tax selling price becomes 1,600 and it charges 10% tax on that. Show the total tax with input tax credit and the total tax without credit. Name the effect. (4 marks)

Try it first, then show the solutionSolution

With ITC: A charges 100. B charges 10% of 1,500 = 150, takes credit of 100, pays 50. Total tax = 100 + 50 = 150 = 10% of 1,500.
Without credit: B's cost base is 1,000 + 100 + 500 = 1,600, so tax on sale = 160. Total tax = 100 + 160 = 260.
Extra tax = 260 - 150 = 110, a tax on tax.
This is the cascading effect, which input tax credit removes.

Answer: With ITC 150; without ITC 260; extra 110 is the cascading effect

Where students lose marks in GST: CGST, SGST, IGST and Input Tax Credit with Numericals (CBSE 11)

The slips examiners see most often, and what to write instead.

Mistake: Charging GST on the price that already includes tax
Using the tax-inclusive price as the value.
Wrong working
GST on 65,000 + 11,700
Right working
GST on the value of supply 65,000 = 11,700
Do this: Use the price before tax.
Usually costs: 1 to 2 marks
Mistake: Forgetting input tax credit
Paying the full GST at every stage.
Wrong working
Wholesaler pays 9,000
Right working
Wholesaler pays 9,000 - 7,200 = 1,800
Do this: Net GST = sales tax - purchase tax.
Usually costs: 2 marks
Mistake: Using CGST and SGST for an inter-state sale
Not noting the states.
Wrong working
Delhi to Jaipur charged CGST and SGST
Right working
IGST is charged on supplies across states
Do this: Check the states.
Usually costs: 1 mark

Exam tips

State the date 1 July 2017 and the replacement of 17 taxes and 23 cesses.
Draw a stage-wise table with value, GST charged, credit and net GST.
Verify that the total of net GST equals the rate on the final value.
Write CGST and SGST as half of the GST for intra-state supplies.

Practice questions on GST: CGST, SGST, IGST and Input Tax Credit with Numericals (CBSE 11)

Write each answer on paper first. Open the hint only if you are stuck, and the answer only when you have finished.

Q1 · 1 mark · MCQBoard level
GST was implemented in India from
(a) 1 April 2016
(b) 1 July 2017
(c) 1 January 2018
(d) 1 April 2019
Hint
One Nation, One Tax.
Answer
(b) 1 July 2017
Q2 · 1 mark · Assertion-reasonHarder board level
Assertion (A): GST is a destination-based consumption tax.
Reason (R): The state in which the goods are finally consumed receives the tax.
(a) Both A and R are true, and R is the correct explanation of A.
(b) Both A and R are true, but R is not the correct explanation of A.
(c) A is true, but R is false.
(d) A is false, but R is true.
Hint
Where is the revenue collected?
Answer
(a) Both A and R are true, and R is the correct explanation of A.
Q3 · 4 marks · Short answerHarder board level
A manufacturer sells goods to a wholesaler for 20,000, the wholesaler sells them to a retailer for 26,000 and the retailer sells them to a consumer for 30,000, all in one state at 5% GST. Find the net GST paid by each trader, the total, and the CGST and SGST on the last sale. (4 marks)
Hint
Credit at each stage is the previous GST.
Answer
Manufacturer: 20,000 x 5% = 1,000; net 1,000. Wholesaler: 26,000 x 5% = 1,300; credit 1,000; net 300. Retailer: 30,000 x 5% = 1,500; credit 1,300; net 200. Total = 1,000 + 300 + 200 = 1,500 = 5% of 30,000. On the last sale CGST = SGST = 750 each.
Q4 · 4 marks · Short answerHarder board level
A furniture maker buys wood for 30,000 (GST 5%) and hardware for 50,000 (GST 12%) from suppliers in his own state, and sells furniture for 1,20,000 (GST 12%) in the same state. Find the total input tax credit, the GST charged on the sale, and the net GST he pays in cash with its CGST and SGST halves. (4 marks)
Hint
Add the two input taxes first.
Answer
Input GST on wood = 30,000 x 5% = 1,500; on hardware = 50,000 x 12% = 6,000; total input tax credit = 7,500. GST on sale = 1,20,000 x 12% = 14,400. Net GST payable = 14,400 - 7,500 = 6,900, of which CGST = 3,450 and SGST = 3,450.
Q5 · 5 marks · Case-basedHOTS / competency
Case: A product priced at 10,000 plus 18% GST is later taxed at 12%. The shop keeps the price at 11,800. A buyer complains, and a trader's purchase invoices are matched online. (5 marks)
(i) Find the price the buyer should pay at 12%. (2)
(ii) Which GST feature does the shop's act violate? (1)
(iii) How does invoice matching help? (2)
Hint
New price is base plus 12%.
Answer
(i) New price = 10,000 + 12% of 10,000 = 11,200; the buyer is overcharged 11,800 - 11,200 = 600. (ii) The anti-profiteering measure, which requires tax benefits to be passed on to consumers. (iii) Matching of invoices through the GST Network (GSTN) reduces tax evasion and brings more businesses into the formal economy.

Test your recall

Answer in your head or on paper first, then open the card. Pulling an answer out of memory makes it stick far better than re-reading.

1.What does GST stand for?Show answer
Goods and Services Tax.
2.How many taxes and cesses did it replace?Show answer
17 indirect taxes (8 central and 9 state) and 23 cesses.
3.What is charged within a state?Show answer
CGST and SGST.
4.What does input tax credit remove?Show answer
The cascading effect, or tax on tax.
5.What is GSTN?Show answer
The GST Network used to match invoices.

GST: CGST, SGST, IGST and Input Tax Credit with Numericals (CBSE 11): frequently asked questions

Who bears GST finally?

The consumer; traders pay only the net tax on their value addition.

What is IGST charged on?

Supplies across states and imports.

Is GST charged on manufacture or on supply?

On the supply of goods or services.