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Question

A manufacuturer marks an article for Rs 5,000. He sells it to a wholesaler at a discount of 25% on the marked price and the wholesaler sells it to a retailer at a discount of 15% on the marked price. The retailer sells it to a consumer at the marked price and at each stage the VAT is 8%. Calculate the amount of VAT received by the Government from  :
(i) The wholesaler                (ii) The retailer
[4 MARKS]


Solution

Each subpart: 2 Marks
Rate of VAT = 8%
StepsManufacturerWholesalerRetailerConsumerM.P.Rs 5,000Rs 5,000Rs 5,000D%25%15%DiscountRs 1,250Rs 750Sale PriceRs 3,750Rs 4,250Rs 5,000Tax paid byTax charged at8%8%8%Consumer=Rs 400The M.P.=Rs 300=Rs 340=Rs 400Tax paid to GovernmentRs 300Rs 40Rs 60
(i) Amount of VAT received by Government from the wholesaler = Rs 40
(ii) Amountof VAT received by Government from the retailer = Rs 60 

Mathematics

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