1

INTERNAL
TRADE
GROUP 5
 GROUP
2

MEMBERS
PRASHANT PANDIT
BHAVYA JAIN
JAHANVI
GYAANVI
PRACHI
ANGEL TUTI
ARPIT
VARSHA
PRIYANSHU PRASHANT.T
ESHAAN
 3

TAX
• It is A mandatory fee or financial charge levied by
any government on an individual or an
organisation to collect revenue for public works
providing the best facilities and infrastructure.
 4

These are the taxes levied on the

These are paid directly to the

entity that imposed that .
Example : Income Tax .

Tax divide on the consumption

of goods and services it is not
directly divide on the income of
a person instead he she has to
pay the tax along with the price
of goods or services bought by
the seller
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GOODS AND SERVICES TAX

It is an indirect tax livid at prescribed rate on every supply
of goods and services. It is a nationwide tax seeking to unify

CONCEPTS RELATED TO GST
Concept of Inter-State Sale :
when the sale of goods take
place from one-state to
another state it is called a
inter-state sale.
6
Concept of Intra-state Sale : when
the sale of goods take place
within the state it is called an
intra-state sale.
 7

3.) CONCEPT OF CGST AND SGST : SGST(I.E STATE

GOODS AND SERVICE TAX ) AND CGST ( I.S CENTRAL GOODS
AND SERVICES TAX ) , THESE TAXES ARE LEVIED ON INTRA-
STATE SALES I.E WITHIN THE SAME STATE.
 8

REVERSE CHARGE
It is the condition where the GST is not charged by the seller
but is paid by the purchaser to the government and claim it
as input GST . Goods and Services placed under Reverse
Charge are :
(1)Payment of fee to the Lawyer
(2)Purchase of goods and services by registered dealer from
unregistered person
(3)Payment for use of Copyright.

a vendor is not registered under GST supplies goods to a

 9

GOODS AND SERVICES TAX : A VALUE

ADDED TAX

This is a value added tax because GST paid is set of against GST

sells the same to B for Rs.1,50,000 and GST rate is 12% , in such
case :

● GST paid by A on purchase : 12% on Rs.1,00,000 = Rs.12,000

● GST collected by A from B on Sale : 12% on Rs. 1,50,000
=Rs.18,000
● GST payable by A to the Government : 12% on 50,000 = Rs.
6,000
R s. 12,000 paid at the time of purchase is set of against Rs.18,000 collected
at the time of sale and the balance Rs.6,000 is payable to the government
 INPUT TAX CREDIT 10

Input Tax Credit is an aggregate total amount of tax paid by a

registered dealer on the total purchases made by him within the
State from other dealers.
When a trader pays GST at the time of purchase, it is called Input
Tax and he collects GST at the time of sale which is called Output
Tax. At the time of paying GST to the government, a trader deducts
the input tax from the output tax and pays the remaining tax. This
deduction of input tax is called Input Tax Credit

FOR EXAMPLE-

● YOU ARE A MANUFACTURER , AND TAX PAYABLE ON

OUTPUT (FINAL PRODUCT) IS R S 450 .

● TAX PAID ON INPUT (PURCHASES) IS R S 300 . YOU CAN

CLAIM INPUT CREDIT OF R S 300 AND YOU ONLY NEED TO
DEPOSIT R S 150 IN TAXES
 11

GOODS AND SERVICES TAX

Key Features of GST:
• The territorial spread of GST is the whole country
•
the present concept of tax on the manufacture or sale of goods
or on the provision of services
• It is based on the principle of destination-based consumption
tax against the present principle of origin-based taxation
• Import of goods and services is treated as inter-State supplies
and would be subject to IGST in addition to the applicable
customs duties.
• There are four tax slabs namely 5 per cent, 12 per cent, 18 per
cent and 28 per cent for all goods or services.
• Exports and supplies to SEZ are zero-rated
 12

APPLICATION OF GST
(1)PURCHASED GOODS FROM X OF THE LIST PRICE OF RS. 1,00,000 AT 10%
TRADE DISCOUNT AND 2% CASH DISCOUNT. PAID CGST AND SGST @ 9%
EACH. PAID (½) AMMOUNT BY CASH IMMEDIATELY. PASS THE
NECESSARY JOURNAL ENTRIES:

CASH CREDIT

GOODS 50,000 50,000

Less : Trade (-) 5,000 (-) 5,000

Discount @10%

Purchase Value 45,000 45,000

Less : Cash (-) 9,00 ------------------
Discount @2%

Taxable Value 44,100 45,000

Add : CGST @ 9% 3,969 4,050
SGST @ 9% 3,969 4,050

Invoice Value 52,038 53,100

 13

JOURNAL ENTRY
Date PARTICULARS L. Amount Dr. Amount Cr.
F

Purchases A/C. 90,000

Dr.

Input CGST A/C. 8,019

Dr.

Input SGST A/C. 8,019

Dr.

To X 53,100

To Cash A/C 52,038

To Discount 9,00
Recieved AlC
Q2. SOLD TO SAHAY LTD. GOODS OF 14

THE LIST PRICE OF RS. 2,00,000 AT 10%

TRADE DISCOUNT AND 2% CASH
DISCOUNT . CHARGED CGST AND SGST
@ 9% EACH . (½) OF THE PAYMENT
RECIEVED BY CASH AT THE TIME OF
SALE ITSELF.
 WORKING 15

CASH CREDIT
GOODS 1,00,000 1,00,000
Less : Trade (-) 10,000 (-) 10,000
Discount @10%
Sales Value 90,000 90,000
Less : Cash (-) 1,800
Discount @2%
Taxable Value 88,200 90,000
Add : CGST @ 9% 7,938 8,100
SGST @ 9% 7,938 8,100
Invoice Value 1,04,076 1,06,200
 JOURNAL ENTRY 16

PARTICULARS L. Amount Dr Amount Cr

F
Sahay Ltd. 1,06,200
Dr
Cash A/C. 1,04,076
Dr.
Discount Allowed AlC. 1,800
Dr .
To Sales A/C 1,80,000
To Output 16,038
CGST A/C
To Output 16,038
SGST A/C
 INTERNAL TRADE
17

• Internal Trade Buying and selling of goods and services

within the boundaries of a nation are referred to as
internal trade.
• Internal trade can be classified into two broad categories
viz.,
(i) wholesale trade
(ii) retail trade.
• Traders dealing in wholesale trade are called wholesale
traders and those dealing in retail trade are called
retailers.
• Internal trade aims at equitable distribution of goods
within a nation speedily and at reasonable cost.
 WHOLESALE TRADE
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Services to SERVICES TO
Wholesale trade Retailers MANUFACTURER
refers to buying Availability of Facilitating large
and selling of goods scale production
goods and Marketing Bearing risk
services in large support Financial assistance
quantities for the Grant of credit Expert advice
purpose of resale Specialised Help in marketing
or intermediate knowledge function
use. Risk sharing Facilitate
production
continuity
Storage
 RETAIL TRADE
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SERVICES TO
A retailer is a WHOLESALERS AND Services to Consumers
business MANUFACTURERS
Help in distribution of Regular availability of
enterprise that goods products
is engaged in New products
the sale of Personal selling: information
goods and Convenience in buying
Enabling large-scale
services operations:
directly to the Wide selection
Collecting market
ultimate information:
consumers After-sales services
Help in promotion
Provide credit
facilities
 TYPES OF RETAILING
20

TRADE
On this basis, there are two categories of
retailers:
• Itinerant Retailers
Itinerant retailers are traders who do not have a
fixed place of business to operate from. They keep
on moving with their wares from street to street or
place to place, in search of customers.
• Fixed Shop Retailers
This is the most common type of retailing in the
market place. As is evident from the name, these are
retail shops who maintain permanent establishment
to sell their merchandise

Characteristics of
Itinerant retailers
➢They are small traders operating
with limited resources.
➢deal in consumer products of
daily
➢The emphasis of such traders is
on providing greater customer
service
➢Limited inventory of
merchandise either at home or at
some other place
➢Some of the most common types
of itinerant retailers operating in
India are as below:
(i)Peddlers and hawkers:
(ii)Market traders:
(iii)Street traders (pavement
vendors):
(iv)Cheap jacks
Characteristics of 21
fixed shop retailers
➢ greater resources and operate on a
relatively large scale
➢ These retailers may be dealing in
different products, including
consumer durables as well as non-
durables.
➢ This category of retailers has greater
credibility and they are in a position
to provide greater services to the
customers
➢ Second-hand goods shop
There are mainly 2 types of fixed shops
. those are
Fixed Shop Small Retailers
(i) General stores:
(ii) Speciality shops:
(iii) Street stall holders:
(iv) Second-hand goods shop
 22

FIXED SHOP LARGE STORES

1. DEPARTMENTAL STORES
Features
Centralised Provide all
purchasing facilities
arrangements.

Functions of
retailing as well Central place
as warehousing.

Joint stock
company
 23
Economy of large-scale operations
Demerits
Attractive services
Lack of personal attention

High operating cost

Merits
High possibility Convenience in buying
of loss

Attract huge no. of customers:

Inconvenient location
CHAIN STORES OR MULTIPLE SHOPS: 24

Merits
Economies of scale
Features
Elimination of
located in fairly populous middlemen:
localities No bad debts:
manufacturing/procurement Transfer of goods
is centralised Diffusion of risk
direct supervision of a Low cost
Branch Manager
flexibility Demerits
All the branches are
controlled by the head office, Limited selection
The prices of goods in such of goods
shops are fixed and all sales Lack of initiative
are made on cash basis. Lack of personal
The head office appoints a touch
inspector Difficult to
change demand
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DIFFERENCE BETWEEN DEPARTMENTAL

STORES AND MULTIPLE SHOP

Pricing
Range of Services Credit
Location Class of Flexibility
products offered facilities
customer
 MAIL ORDER HOUSE 26

Mail order houses are

the retail outlets that
sell their merchandise
through mail .
Advantages Disadvantages
Limited capital Lack of personal contact
requirement High promotion cost
Elimination of middle men No after sales service
Absence of bad debt No credit facilities
Wide reach Delayed delivery
Convenience Possibility of abuse
High dependence on postal
services
 CONSUMER COOPERATIVE
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STORE
A consumer cooperative store is an organisation
owned, managed and controlled by consumers
themselves.

Disadvantages
• Lack of initiative
• Shortage of funds
• Lack of patronage
• Lack of business training
Advantages
Ease information
Limited liability
Democratic management
Lower prices
Cash sales
Convenient location
 Super Markets A super market is a large 28

retailing business unit selling wide variety of

consumer goods on the basis of low price appeal,
wide variety and assortment, self-service and heavy
emphasis on merchandising appeal

• Some of the important characteristics of a super market are as

follows:
• A super market generally carries a complete line of food items
and groceries, in addition to non-food convenience goods.
• The buyers can purchase different products as per their
:
requirements under one roof
• A super market operates on the principle of self-service
• The prices of the products are generally lower
• goods are sold on cash basis only.
• located at central locations to secure high turnover.
 Super market
29

Advantages Disadvantages
One roof No credit:
low cost No personal attention
Central location Mishandling of goods
Wide selection High overhead expenses
No bad debts Huge capital
Benefits of being large requirement
scale

VENDING MACHINE
Vending machines are the newest
revolution in marketing methods.
Vending machines can be useful for
selling pre-packed brands of low priced
products which have high turnover and
which are uniform in size and weight.
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ROLE OF COMMERCE AND INDUSTRY

ASSOCIATIONS IS IN PROMOTION OF
INTERNAL TRADE
• Interstate movement of goods:
• Octroi and other local levies
• Harmonisation of sales tax structure and Value Added Tax:
• Marketing of Agrobased products and related issues:
• Weights and Measures and prevention of duplication brands:
• Excise duty:
• Promoting sound infrastructure:
• Labour legislation
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