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In this Exercise, all the prices are excluding Vat unless specified

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Question 1: A person purchases an article for Rs.6200 and sells it to a customer for Rs.8500. if the sales-tax (under VAT) is 8%; find the VAT paid by the person.

Answer:

Cost Price of the article = Rs. \  6200

Selling Price of the article = Rs. \ 8500 

VAT = Tax \ Charges - Tax \ Paid 

= Tax \ on \ Selling \ Prices - Tax \ on \ Cost \ Prices 

= \frac{8}{100} \times 8500- \frac{8}{100} \times 6200 

= Rs.  \ 184 

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Question 2: A purchases an article for Rs.3600 and sells it to B for Rs.4800. B in turn, sells the article to C for Rs.5500. If the Sales-Tax (under VAT) is 10%, find the VAT levied on A and B.

Answer:

Cost Price of the article for A = Rs. \  3600

Selling Price of the article  A = Rs. \ 4800 

VAT levied on A = \frac{10}{100} \times (4800-3600) = Rs. \ 120

Cost Price of the article for B = Rs. \  4800

Selling Price of the article  B = Rs. \ 5500 

VAT levied on B = \frac{10}{100} \times (5500-4800) = Rs. \ 70 

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Question 3: A manufacturer buys raw material for Rs.60,000 and pays 4% tax. He sells the ready stock for Rs.92,000 and charged 12.5% tax. Find the VAT paid by the manufacturer.

Answer:

Cost price of the raw material  = Rs.  \ 60000 

Tax paid by the manufacturer  = \frac{4}{100} \times 60000 = Rs.  \ 2400 

Selling price of the stock  = Rs.  \ 92000 

Tax charged  = \frac{12.5}{100} \times 92000 = Rs. \ 11500 

 VAT  = Tax  \ recovered  \ on  \ sale - Tax  \ paid  \ on  \ purchase 

 = Rs.  \ 11500 - Rs.  \ 2400 = Rs. \ 9100 

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KG5Question 4: The cost of an article is Rs.6000 to a distributor. He sells it to a trader for Rs.7500 and the trader sells it to a customer for Rs.8000. If the VAT rate is 12.5%; Find the VAT paid by the:
i. Distributor
ii. Trader

Answer:

Cost Price of the article for distributor = Rs. \  6000

Selling Price of the article for distributor = Rs. \ 7500 

VAT levied on distributor = \frac{12.5}{100} \times (7500-6000) = Rs. \ 187.50 

Cost Price of the article for Trader = Rs. \  7500

Selling Price of the article  for Trader = Rs. \ 8000 

VAT levied on Trader = \frac{12.5}{100} \times (8000-7500) = Rs. \ 62.50 

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Question 5: The printed price of an article is Rs.2500. A wholesaler sells it to a retailer at 20% discount and charges sales-tax at the rate of 10%. Now the retailer, in turn, sells the article to a customer at its list price and charges the sales-tax at the same rate. Find:
i. The amount that retailer pays to the wholesaler.
ii. The VAT paid by the retailer.

Answer:

Printed Price of the article for wholesaler = Rs. \  2500

Cost Price of the article for retailer = \frac{100-20}{100} \times 2500 =Rs. \  2000

Amount paid by the retailer = \frac{10}{100} \times 2000 +2000 = Rs. \ 2200

Selling Price of the article for retailer = Rs. \ 2500 

VAT levied on distributor = \frac{10}{100} \times (2500-2000) = Rs. \ 50 

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Question 6: A retailer buys an article for Rs.800 and pays the sale-tax at the rate of 8%. The retailer sells the same article to a customer for Rs.1000 and charges sales-tax at the same rate. Find:
i. The price paid by a customer to buy this article.
ii. The amount of VAT paid by the retailer.

Answer:

Cost price of the article  = Rs.  \ 800 

Tax paid by the retailer  = \frac{8}{100} \times 800 = Rs.  \ 64 

Selling price of the article  = Rs.  \ 1000 

Tax charged  = \frac{8}{100} \times 1000 = Rs. \ 80 

Price paid by the customer = Rs. \ 1000 + Rs. \ 80 = Rs. \ 1080

 VAT  = Tax  \ recovered  \ on  \ sale - Tax  \ paid  \ on  \ purchase 

 = Rs.  \ 80 - Rs.  \ 64 = Rs. \ 16 

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Question 7: A shopkeeper buys 15 identical articles for Rs.840 and pays sales-tax at the rate of 8%. He sells 6 of these articles at Rs.65 each and charges sales-tax at the same rate. Calculate the VAT paid by the shopkeeper against the sale of these six articles.

Answer:

Cost price of the article  = Rs.  \ \frac{840}{15} = Rs. \ 56 

Tax paid by the retailer  = \frac{8}{100} \times 56 \ times 6 = Rs.  \ 26.88 

Selling price of the article  = Rs.  \ 65 

Tax charged  = \frac{8}{100} \times 65 \times 6 = Rs. \ 31.20 

 VAT  = Tax  \ recovered  \ on  \ sale - Tax  \ paid  \ on  \ purchase 

 = Rs.  \ 31.20 - Rs.  \ 26.88 = Rs. \ 4.32 

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Question 8: The marked price of an article is Rs.900 and the rate of sales-tax on it is 6%. If on selling the article at its marked price, a retailer has to pay VAT=Rs.4.80; Find the money paid by him (including sales-tax) for purchasing this article.

Answer:

Let Cost price of the article  = Rs. \ x 

Tax paid by the retailer  = \frac{6}{100} \times x  = Rs.  \ 0.06x 

Selling price of the article  = Rs.  \ 900 

Tax charged  = \frac{6}{100} \times 900  = Rs. \ 54 

 VAT  = Tax  \ recovered  \ on  \ sale - Tax  \ paid  \ on  \ purchase 

 = Rs.  \ 54 - Rs.  \ 0.06x  = Rs. \ 4.80 \Rightarrow x = 820

Money paid = Rs. \ 820 + Rs. \ 0.06 \times 820 = Rs. \ 869.20

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EG12Question 9: A manufacturer marks an article at Rs.5000. 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:
i. The Wholesaler
ii. The Retailer [2010]

Answer:

Market Price of the article for wholesaler = Rs. \  5000

Cost Price of the article for wholesaler = \frac{100-25}{100} \times 5000 =Rs. \  3750

Amount of tax paid by the wholesaler = \frac{8}{100} \times 3750  = Rs. \ 300 

Cost Price of the article for retailer = \frac{100-15}{100} \times 5000 =Rs. \  4250

Amount of tax paid by the retailer = \frac{8}{100} \times 4250  = Rs. \ 340

Selling price of the article for retailer = Rs. \  5000

Amount of tax paid by the end customer = \frac{8}{100} \times 5000  = Rs. \ 400 

Vat paid by retailer = 400 - 340 = Rs. 60

Vat paid by wholesaler = 340 - 300 = Rs. 40 

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Question 10: A shopkeeper buys an article at a discount of 30% and pays sales-tax at the rate of 8%. The shopkeeper, in turn, sells the article to a customer at the printed price and charges sales tax at the same rate. If the printed price of the article is Rs.2500; Find:
i. The price paid by the shopkeeper.
ii. The price paid by the customer.
iii. The VAT paid by the shopkeeper.

Answer:

Printed Price of the article for shopkeeper = Rs. \  2500

Cost Price of the article for shopkeeper = \frac{100-30}{100} \times 2500 =Rs. \  1750

Tax paid by the shopkeeper = \frac{8}{100} \times 1750  = Rs. \ 140 

Price paid by the shopkeeper = Rs. \  1750 + \  Rs. 140 = Rs. \ 1890

Selling Price of the article for shopkeeper = Rs. \ 2500 

Tax paid by the customer = \frac{8}{100} \times 2500  = Rs. \ 200 

Price paid by the customer = Rs. \  2500 + \  Rs. 200 = Rs. \ 2700 

VAT paid by the shopkeeper = \frac{8}{100} \times (2500-1750) = Rs. \ 60 

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Question 11: A shopkeeper sells an article at its list price Rs.3000 and charges sales-tax at the rate of 12%. If the VAT paid by the shopkeeper is Rs.72, at what price did the shopkeeper buy the article inclusive of sales-tax?

Answer:

Let Cost Price of the article for shopkeeper = Rs. \  x

Tax paid by the shopkeeper = \frac{12}{100} \times x  = Rs. \ 0.12x 

Selling Price of the article for shopkeeper = Rs. \ 3000 

Tax paid by the customer = \frac{12}{100} \times 3000  = Rs. \ 360 

 VAT  = Tax  \ recovered  \ on  \ sale - Tax  \ paid  \ on  \ purchase 

 = Rs.  \ 360 - Rs.  \ 0.12x  = Rs. \ 72 \Rightarrow x = Rs. \ 2400 

Tax paid by the shopkeeper = 0.12 \times 2400 = Rs. 288 

Price paid by the shopkeeper = 2400 + 288 = Rs. 2688

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EG6Question 12: A manufacturer marks an article for Rs.10,000. He sells it to a wholesaler at 40% discount. The wholesaler sells this article to a retailer at 20% discount on the marked price of the article. If retailer sells the article to a customer at 10% discount and the rate of sales-tax is 12% at each stage, find the amount of VAT paid by the:
i. Wholesaler
ii. Retailer

Answer:

Market Price of the article for wholesaler = Rs. \  10000

Cost Price of the article for wholesaler = \frac{100-40}{100} \times 10000 =Rs. \  6000

Amount of tax paid by the wholesaler = \frac{12}{100} \times 6000  = Rs. \ 720 

Cost Price of the article for retailer = \frac{100-20}{100} \times 10000 =Rs. \  8000

Amount of tax paid by the retailer = \frac{12}{100} \times 8000  = Rs. \ 960 

Selling price of the article for retailer = \frac{100-10}{100} \times 10000 =Rs. \  9000

Amount of tax paid by the end customer = \frac{12}{100} \times 9000  = Rs. \ 1080 

Vat paid by retailer = 1080 - 960 = Rs. 120 

Vat paid by wholesaler = 960 - 720 = Rs. 240 

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