[amp_mcq option1=”Expenses ‘plus’ profit” option2=”Cost plus tax” option3=”Cost plus tax plus profit” option4=”Tax plus profit” correct=”option2″]
The correct answer is: B. Cost plus tax
Value addition is the difference between the value of the inputs used in a production process and the value of the outputs produced. In other words, it is the amount of value that is added to a product or service during the production process.
Under GST, value addition is calculated by adding the cost of the inputs used in a production process to the amount of tax that is paid on those inputs. The resulting amount is then used to calculate the GST that is payable on the output of the production process.
Option A is incorrect because it includes profit in the calculation of value addition. Profit is not considered to be a part of the value of a product or service under GST.
Option C is incorrect because it includes tax twice in the calculation of value addition. Tax is only included once in the calculation of value addition, when it is added to the cost of the inputs used in a production process.
Option D is incorrect because it only includes tax in the calculation of value addition. Profit is not considered to be a part of the value of a product or service under GST.