A purchases an article for Rs. 7,200 and sells it to B for Rs. 9,600. B, in turn, sells the article to C for Rs. 11,000. If the tax (under VAT) is 10%, find the VAT paid by A and B.

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Solution

C.P. of an article for A = Rs. 7200
C.P. of the article for B = Rs.9600
and C.P. for C = Rs. 11000
Rate of VAT in each case = Rs. 10%
$∴$ VAT charged by A = Rs.7200 $\times \frac{10}{100} = R s . 720$
VAT charged by B = Rs.9600 $\times \frac{10}{100} = R s . 960$
and VAT charged by C = Rs.11000 $\times \frac{10}{100} = R s . 1100$
Now VAT levied on A = Rs. 960-Rs.720
= Rs.240
and VAT levied on B = Rs.1100 - Rs.960
= Rs.140

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