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Questions
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
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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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