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Question

A purchases an article for ₹ 3,100 and sells it to B for ₹ 4250. B in turn sells it to C for ₹ 5000. If VAT is 10%, find the VAT levied on A and B.


  1. Rs. 116, Rs. 82 respectively

  2. Rs.115, Rs. 85 respectively

  3. Rs.115, Rs. 75 respectively

  4. Rs. 136, Rs. 75 respectively


Solution

The correct option is C

Rs.115, Rs. 75 respectively


VAT paid by A = 10% of ₹ (4250 - 3100)

= 10% of  ₹ 1,150

= ₹ 115

VAT paid by B = 10% of ₹ (5,000 - 4250)

                       = 10% of 750

                       = ₹ 75.

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