#### Question

A dealer buys an article at a discount of 30% from the wholesaler, the marked price being Rs. 6000. The dealer sells it to a shopkeeper at a discount of 10% on the marked price. If the rate of the VAT is 6%, find

1) The price paid by the shopkeeper including the tax.

2) The VAT paid by the dealer

#### Solution

Marked price of the article = Rs. 6,000.

A dealer buys an article at a discount of 30% from the wholesaler

∴ Price of the article which the dealer paid to the wholesaler

= 6000 - 30% of 6000

`= 6000 - 30/100 xx 6000`

= Rs 4200

Sales tax paid by dealer = 6% of 4200 = `6/100 xx 4200` = Rs 252

∴Amount of the article inclusive of sales tax at which the dealer bought it

= Rs.4200 + Rs.252 = Rs.4452

Dealer sells the article at a discount of 10% to the shopkeeper.

∴ Price of the article which the shopkeeper paid to the dealer

= 6000 - 10% of 6000

`= 6000 - 10/100xx6000`

= Rs 5400

Sales tax paid by shopkeeper = 6% of 5400 = `6/100xx 5400` = Rs 324

∴ Amount of the article inclusive of sales tax at which the shopkeeper bought it

= Rs.5400 + Rs.324 = Rs.5724

The value added by dealer = Rs.5400 - Rs.4200 = Rs.1200

Amount of VAT paid by dealer

= 6% of 1200

`= 6/100 xx 1200`

= Rs 72

∴ Price paid by shopkeeper including tax is Rs 5724

∴ VAT paid by dealer is Rs.72.