Question

In a particular tax period, a trader purchased goods worth Rs 15,00,000 and paid a VAT of Rs 1,35,000. During the same period, he sold goods worth Rs 8,00,000 taxed at 12% and goods worth Rs 12,00,000 taxed at 5%. Calculate his tax liability for this period.

Answer 1

Tax paid on purchase of goods =Rs 1,35,000.

Tax on goods sold = 12 %  of Rs 8,00,000 + 5°10 of Rs 12,00,000 

`= "Rs" 12/100 xx 800000 + "Rs" 5/100 xx 1200000`

= Rs 96, 000 + Rs60, 000

= Rs 1,56,000

Total tax liability =Tax on sale - tax on purchase 

= Rs ( 1,56,000 - 1,35,000) 

=Rs 21,000

Hence, total tax liability of trader= Rs 21,000