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

R s . 13, 870

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R s . 12, 160

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R s . 10, 370

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R s . 9, 100

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Solution

The correct option is D $R s . 9, 100$
VAT=Output tax-input tax
Output tax= Tax realized by the retailer from the consumer
Output tax=12.5% of 92000 $= \frac{12.5}{100} \times 92000 = R s .11500$
Input tax= Tax paid by the retailer to the wholesaler
Input tax=4% of 60000 $= \frac{4}{100} \times 60000 = R s .2400$
VAT $= 11500 - 2400 = R s .9100$

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

The correct option is D Rs.9,100VAT=Output tax-input taxOutput tax= Tax realized by the retailer from the consumerOutput tax=12.5% of 92000=12.5100×92000=Rs.11500Input tax= Tax paid by the retailer to the wholesalerInput tax=4% of 60000=4100×60000=Rs.2400VAT=11500−2400=Rs.9100