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Question
In a particular tax period, a jewellery store purchased diamonds worth Rs 20,00,000 taxable at 15%, gold worth Rs 50,00,000 taxable at 12% and silver worth Rs 12,00,000 taxable at 8%. In the same period, the company sold diamonds worth Rs 34,00,000, gold jewellery worth Rs 86,00,000 and silver artifacts worth Rs 15,00,000. Calculate the tax liability of the company for this period.
Solution
For Diamonds:
Tax on purchase = 15 % of Rs 20,00,000
`= 15/100 xx "Rs" 2000000`
= Rs 300000
Tax on sale = 15 % of 34,00,000
`= 15/100 xx "Rs" 3400000`
= Rs 5,10, 000
Total tax= tax on sale - tax on purchase
= Rs (5,10,000 - 3,00,000) = Rs 2,10,000
For Gold:
Tax on purchase = 12 % of Rs 50,00,000
`= 12/100 xx "Rs" 5000000`
= Rs 600000
Tax on sale = 12 % of 86,00,000
`= 12/100 xx "Rs" 8600000`
= Rs 10,32,000
Total tax =tax on sale - tax on purchase
=Rs (10,32,000-6,00,000)
=Rs 4,32,000
For Silver:
Tax on purchase = 8 % of Rs 12,00,000
`= 8/100 xx "Rs" 1200000`
= Rs 96000
Tax on sale = 8 % of 15,00,000
`= 8/100 xx "Rs" 1500000`
= Rs 1, 20, 000
Total tax =tax on sale - tax on purchase
=Rs ( 1,20,000-96,000)
=Rs 24,000
Total tax liability of the company
=Tax on diamonds + tax on gold +tax on silver
= Rs (2,10,000 + 4,32,000 + 24,000)
= Rs 666000
Hence, Total tax liability of the company =Rs 666000
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