Question

A manufacturer buys some goods for Rs.60,000 and pays 5% tax. He sells these goods for Rs. 80,000 and charges tax at the rate of 12%. Find the VAT paid by the manufacturer.

Answer 1

C.P. of raw material = Rs. 60000
Rate of tax = 5%
$\therefore$ Total tax = Rs. 60000 $\times \frac{5}{100}$ Rs. 3000
S.P. of that material = Rs. 80,000
Rate of tax = 12%
$\therefore$ Total tax = Rs. 80,000 $\times \frac{12}{100}$ = Rs. 9600
$\therefore$ VAT paid by the manufacturer
= Rs. 9600-Rs.3000 = Rs.6600