Question

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

Answer 1

Purchase price for manufacture = Rs 60,000

Tax paid by manufacturer = 4% of Rs 60,000

`= 4/100 xx 60000 = "Rs"  2400`

Sale price for manufacturer = Rs 92,000

Tax charged by manufacturer = 12.5% of Rs 92,000

`= 12.5/100 xx  92000= "Rs"  11500`

VAT paid by manufacturer = Rs 11500 - Rs 2400

= Rs 9100