#### Question

A purchases an article for Rs 3,600 and sells it to B for Rs 4,800. B, in turn, sells the article to C for Rs 5,500. If the sales tax(under VAT) is 10%, find the VAT levied on A and B.

#### Solution

A purchase price for A = Rs 3,600

Tax paid by A = `10% "of Rs" 3600`

`= 10/100 xx 3600 = "Rs" 360`

Purchase price for B = Rs 4,800

Tax paid by B to A = 10% of Rs 4,800

`= 10/100 xx 4800 = "Rs" 480`

Purchase price for C = Rs 5,500

Tax paid by C to B = 10% of Rs 5,500

`= 10/100 xx 5500 = "Rs" 550`

VAT paid by A = Rs 480 – Rs 360 = Rs 120

VAT paid by B = Rs 550 – Rs 480 = Rs 70

Is there an error in this question or solution?

Solution A Purchases an Article for Rs 3,600 and Sells It to B for Rs 4,800. B, in Turn, Sells the Article to C for Rs 5,500. If the Sales Tax(Under Vat) is 10%, Find the Vat Levied on a and B. Concept: Introduction to Sales Tax and Value Added Tax.