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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

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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 marks an article at ₹ 5,000. He sells this article 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 its marked price. If the retailer sells the article without any discount and at each stage, the sales tax is 8%, calculate the amount of VAT paid by :(1) the wholesaler (2) the retailer

Numerical
Sum
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Solution

M.P. of an article = Rs. 5000

Marked price of an article Rs. 5,000

Sale price for manufacturer Rs. 5,000 25% of Rs. 5,000

`= "Rs"  5000 - 25/100 xx "Rs"  5000`

`"Rs"  5000 - "Rs"  1250`

= Rs 3750

Tax paid by wholesaler 8% of Rs. 3,750

`= 8/100 xx 3750`

= Rs 300

Sale price for wholesaler 5,000 15% of Rs. 5,000

`= "Rs"  5000 - 15/100 xx "Rs"  5000`

= Rs 5000 - Rs 750

= Rs 4250

Tax paid by retailer 8% of Rs. 4,250

`= 8/100 xx 4250`

Rs 340

Sale price for retailer = Rs 5000

Tax paid by customer = 8% of Rs 5000

`= 8/100 xx 5000`

= Rs 400

VAT paid by wholesaler Rs. 340 - Rs. 300 = Rs. 40

VAT paid by retailer Rs. 400 - Rs. 340 = Rs. 60

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