Question

In a particular tax period A to Z Emporium purchased Silk Sarees worth Rs 5,00,000 taxable at 12%, Cotton Sarees worth Rs 8,00,000 taxable at 5% and Handloom Sarees worth Rs 3,00,000 exempted from tax. In the same tax period it sold Silk Sarees worth Rs 12,00,000 , Cotton Sarees worth 16,00,000 and Handloom Sarees worth Rs 7,00,000. Silk Sarees worth Rs 40,000 were returned due to manufacturing defect and Cotton Sarees worth Rs 60,000 were returned due to loss of colour. Calculate the tax paid by the firm for this period.

Answer 1

For Silk Sarees : 

Tax on purchase = 12 %  of Rs 5,00,000 

=`12/100 xx  "Rs"  500000`

= Rs 60000

Cost of total Sarees sold = cost of Sarees sold - cost of defective Sarees 

=Rs ( 12,00,000 - 40,000) 

= Rs 11,60,000

Tax on sale= 12 %  of Rs 11,60,000

=`12/100 xx  "Rs"  1160000`

= Rs 139200

Total tax on Silk Sarees =Rs ( 1,39,200 - 60,000) =Rs 79,200 

For Cotton Sarees:

Tax on purchase = 5 %  of Rs 8,00,000

=`5/100 xx  "Rs"  8100000 = "Rs"  40,000`

Cost of total Sarees sold = cost of Sarees sold - cost of defective Sarees

= Rs ( 16,00,000 - 60,000) 

= Rs 15,40,000

Tax on sale = 5 % of Rs 15,40,000 

=`5/100 xx  "Rs"  1540000`

= Rs 77000

Total tax on Cotton Sarees =Rs (77,000 - 40,000) =Rs 37,000

For Handloom Sarees:

They are exempted from tax. Hence, tax =Rs 0. 

Total Tax paid by the firm in the given period =Total tax on silk Sarees +total tax on cotton Sarees

=Rs ( 79,200 + 37,000)

Total tax paid =Rs 1,16,200