Question

A retailer buys an article for Rs 800 and pays the sales tax at the rate of 8%. The retailer sells the same article to a customer for Rs 1,000 and charges sales tax at the same rate. Find:

1) the price paid by a customer to buy this article.

2) the amount of VAT paid by the retailer.

Answer 1

Cost price for retailer = Rs 800

Sales tax paid by retailer = 8% of Rs 800

`= 8/100 xx 800 = "Rs"  64`

Sale price for retailer = Rs 1,000

Tax charged by retailer = 8% of Rs 1,000

= 8/100 xx 1000 = Rs 80

Price paid by customer = Rs 1,000 + Rs 80 = Rs 1,080

VAT paid by retailer = Rs 80 – Rs 64 = Rs 16