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Class 11 Internal Trade: cheat sheet
CBSE Business Studies. Trade within a country: the services of wholesalers and retailers, itinerant and fixed shop retailers, departmental and chain stores, and how GST is charged.
Key ideas
- Internal trade is buying and selling within one country; it is wholesale (large lots to retailers) or retail (small lots to final consumers).
- Wholesalers help manufacturers by bulk buying, storage, finance, bearing risk and market advice, and help retailers with ready stock, credit and specialised knowledge.
- Retailers help manufacturers by distributing goods and passing on market information, and help consumers with regular supply, choice, information, after-sales service and credit.
- Itinerant retailers have no fixed shop: peddlers and hawkers, market traders, street traders and cheap jacks.
- Fixed shop retailers range from general, speciality, single line and second-hand shops to large departmental stores and chain stores.
- A departmental store sells many kinds of goods in separate departments under one roof; a chain store runs many similar shops in different places, with central buying and uniform prices.
- GST is one destination-based tax on the supply of goods and services; input tax credit means tax is paid only on the value added at each stage.
Remember
| Sale within a state | CGST + SGST, each half of the GST rate |
| Sale from one state to another | IGST at the full rate |
| Price after a margin | price paid × (1 + margin% ÷ 100) |
| Consumer’s price through two traders | maker’s price × (1 + w ÷ 100) × (1 + r ÷ 100) |
| GST paid with input tax credit | GST% of the sale price − GST% of the purchase price |
| Departmental vs chain store | one central place, wide variety vs many places, one line; services many vs few; credit vs cash |
Watch out
- Adding the two margins first (5% + 25% = 30%): the retailer’s margin is on the price he paid, not on the maker’s price.
- Charging IGST on a sale within the state, or CGST and SGST on a sale to another state.
- Charging GST on the whole sale price without taking credit for the GST already paid on purchases.
Worked example
A manufacturer sells a cooler to a wholesaler for ₹700. The wholesaler adds 5% and sells to a retailer in the same state; the retailer adds 25%. Suppose GST is 18%. (a) Find the retailer’s price before GST. (b) Find the CGST and SGST on the retailer’s sale. (c) Name two services the wholesaler gives the manufacturer.
Working: 700 × 1.05 × 1.25; half of 18%
Answer: (a) ₹918.75 (b) ₹82.69 each (c) e.g. bulk buying, storage, finance, market information
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