A manufacturer produces a good and sells it to a wholesaler at a price of Rs.500 and wholesaler sells it to retailer at a price of Rs.600. The retailer sells it to the customer at a price of Rs.800. If the sales tax charged is $R s 5 %$ . Find the total tax charged by the government under VAT.

Rs 95

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Rs 89.20

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Rs 60

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Rs 50

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Solution

The correct option is A
Rs 95

Cost of production of manufacturer = Cost of wholesaler = Rs.500.

Tax charged by manufacturer from wholesaler = $R s 5 %$ of Rs.500 = Rs.25.

Cost charged by wholesaler from retailer = Rs.600

Tax charged by the wholesaler = $R s 5 %$ of Rs.600 = Rs.30.

The cost charged by the retailer from customer = Rs.800.

Tax charged by retailer from customer = $R s 5 %$ of Rs.800 = Rs.40.

The Government collects the same tax at different stages = Rs.(25 + 30 + 40) = Rs.95

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A manufacturer produces a good and sells it to a wholesaler at a price of Rs.500 and wholesaler sells it to retailer at a price of Rs.600. The retailer sells it to the customer at a price of Rs.800. If the sales tax charged is Rs 5%. Find the total tax charged by the government under VAT.

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