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Question
In a particular tax period A to Z Emporium purchased Silk Sarees worth Rs 5,00,000 taxable at 12%, Cotton Sarees worth Rs 8,00,000 taxable at 5% and Handloom Sarees worth Rs 3,00,000 exempted from tax. In the same tax period it sold Silk Sarees worth Rs 12,00,000 , Cotton Sarees worth 16,00,000 and Handloom Sarees worth Rs 7,00,000. Silk Sarees worth Rs 40,000 were returned due to manufacturing defect and Cotton Sarees worth Rs 60,000 were returned due to loss of colour. Calculate the tax paid by the firm for this period.
Solution
For Silk Sarees :
Tax on purchase = 12 % of Rs 5,00,000
=`12/100 xx "Rs" 500000`
= Rs 60000
Cost of total Sarees sold = cost of Sarees sold - cost of defective Sarees
=Rs ( 12,00,000 - 40,000)
= Rs 11,60,000
Tax on sale= 12 % of Rs 11,60,000
=`12/100 xx "Rs" 1160000`
= Rs 139200
Total tax on Silk Sarees =Rs ( 1,39,200 - 60,000) =Rs 79,200
For Cotton Sarees:
Tax on purchase = 5 % of Rs 8,00,000
=`5/100 xx "Rs" 8100000 = "Rs" 40,000`
Cost of total Sarees sold = cost of Sarees sold - cost of defective Sarees
= Rs ( 16,00,000 - 60,000)
= Rs 15,40,000
Tax on sale = 5 % of Rs 15,40,000
=`5/100 xx "Rs" 1540000`
= Rs 77000
Total tax on Cotton Sarees =Rs (77,000 - 40,000) =Rs 37,000
For Handloom Sarees:
They are exempted from tax. Hence, tax =Rs 0.
Total Tax paid by the firm in the given period =Total tax on silk Sarees +total tax on cotton Sarees
=Rs ( 79,200 + 37,000)
Total tax paid =Rs 1,16,200
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