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

Rs 95

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Rs 60

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Solution

The correct option is A
Rs 95

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

Tax charged by manufacturer from wholesaler = $5 %$ of ₹ 500 =₹ 25.

Price paid by retailer = ₹ 600

Tax collected by the wholesaler from retailer = $5 %$ of ₹ 600 = ₹ 30.

Price paid by customer = ₹ 800.

Tax collected by retailer from customer = $5 %$ of ₹ 800 = ₹ 40.

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

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

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