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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.
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