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CISCE(English Medium) ICSE Class 10
Question Papers433
Textbook Solutions54148
MCQ Online Mock Tests7
Important Solutions7810
Concept Notes & Videos1108
Time Tables20
Syllabus

Tax and Its Computation

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Topics

  • Introduction
  • Definition: Direct Taxes
  • Definition: Indirect Taxes
  • Formula
  • Computation of Tax
  • Examples
CISCE: Class 10

Definition: Direct Taxes

These are the taxes paid by an individual or an organisation directly to the government.

These include Income Tax, Wealth Tax, Corporate Tax and Capital Gains Tax.

CISCE: Class 10

Definition: Indirect Taxes

These are the taxes on goods and services paid by the customer, collected by an individual or an organisation and deposited with the government.

CISCE: Class 10

Definition: Dealer

A dealer is a person who buys goods/services for resale. 

CISCE: Class 10

Definition: List Price

 It is the price at which an article is marked.

List price is also known as marked price (M.P.), printed price, quoted price, etc. 

CISCE: Class 10

Definition: Discount

In order to sell out the old stock or for some other reason(s), shopkeepers offer a certain percentage of the list price as a discount. 

This discount is always calculated on the list price. 

CISCE: Class 10

Definition: Selling Price (S.P.)

It is the price at which a trader sells his/her goods, with any discount applied.

The selling price is also called the sale price.

CISCE: Class 10

Formula: Selling Price (S.P.)

The selling price = List price - Discount = Discounted price 

When an article is sold without any discount, its selling price = its list price.

Example

Waheeda bought an air cooler for ₹ 3300 including a tax of 10%. Find the price of the air cooler before VAT was added.

The price includes the VAT, i.e., the value-added tax. Thus, a 10% VAT means if the price without VAT is ₹ 100 then the price including VAT is ₹ 110.
Now, when price including VAT is ₹ 110, original price is ₹ 100.
Hence when price including tax is ₹ 3300, the original price
= ₹ `100/110 xx 3300`
= ₹ 3000.

Example

The cost of a pair of roller skates at a shop was Rs. 450. The sales tax charged was
5%. Find the bill amount.
On ₹ 100, the tax paid was ₹ 5.
On ₹ 450, the tax paid would be = ₹ `5/100 xx 450` = ₹ 22.50
Bill amount = Cost of item + Sales tax
= ₹ 450 + ₹ 22.50
= ₹ 472.50.

Example

Salim bought an article for ₹ 784 which included GST of 12%. What is the price of the article before GST was added?
Let the original price of the article be ₹ 100. GST = 12%.
Price after GST is included = ₹ (100 + 12) = ₹ 112
When the selling price is ₹ 112 than the original price = ₹ 100.
When the selling price is ₹ 784, then the original price
= ₹ `100/112 xx 784`
= ₹ 700.

Video Tutorials

We have provided more than 1 series of video tutorials for some topics to help you get a better understanding of the topic.

Series 1


Series 2


Shaalaa.com | Sales Tax and Value Added Tax Example 1

Shaalaa.com


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Related QuestionsVIEW ALL [46]

A wholesaler buys a computer from a manufacturer for ₹ 40000. He marks the price of the computer 20% above his cost price and sells it to a retailer at a discount of 10% on the marked price. The retailer sells the computer to a consumer at the marked price. If the rate of sales tax (under VAT) is 10% at every stage, then choose the correct answer from the given four options
Cost of the computer to the retailer (excluding tax) is

A manufacturer marks an article for Rs. 5000. He sells it to a wholesaler at a discount of 25% on the marked price and the wholesaler sells it to a retailer at a discount of 15% on the marked price. The retailer sells it to a consumer at the marked price and at each stage, the VAT is 8%. Calculate the amount of VAT received by the government from:
(1) the wholesaler,
(2) the retailer.

A manufacturer listed the price of his goods at ₹ 160 per article. He allowed a discount of 25% to a wholesaler who in his turn allowed a discount of 20% on the listed price to a retailer. The rate of sales tax on the goods is 10%. If the retailer sells one article to a consumer at a discount of 5% on the listed price, then find
(i) the VAT paid by the wholesaler.
(ii) the VAT paid by the retailer.
(iii) the VAT received by the Government.

Tarun bought and article for Rs. 8000 and spent Rs. 1000 for transportation. He marked the article Rs. 11,700 and sold it to a customer. If the customer had to pay 10% sales tax, find:
(1) the customer’s price
(2) Tarun’s profit percent.

The printed price of an article is ₹ 60000. The wholesaler allows a discount of 20% to the shopkeeper. The shopkeeper sells the article to the customer at the printed price. Sales tax (under VAT) is charged at the rate of 6% at every stage. Find :
(i) the cost to the shopkeeper inclusive of tax.
(ii) VAT paid by the shopkeeper to the Government.
(iii) the cost to the customer inclusive of tax.

[missing]

The price of a washing machine, inclusive of sales tax is Rs 13,530/-. If the sales tax is 10%, find its basic cost price.

A retailer purchases a fan for ₹ 1200 from a wholesaler and sells it to a consumer at a 15% profit. If the rate of sales tax (under VAT) at every stage is 8%, then choose the correct answer from the given four options
VAT paid by the retailer

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