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.

Answer 1

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