A retailer buys an article for Rs. 800 and pays the sales tax at the rate of 8% the retailer sells the same article to a customer forRs.1, 000 and charges sales tax at the same rate. Find: the amount that the reatailer pays to the wholeseller ; the amount of VAT paid by the reatailer.

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Solution

Dear student
$T h e s a l e s t a x p a i d b y t h e r e t a i l e r = 8 % o f R s 800 = \frac{8}{100} \times 800 = R s 64 S o, t o t a l a m o u n t p a i d t h e r e t a i l e r t o t h e w h o l e s a l e r = R s (800 + 64) = R s 864 T a x r e c o v e r e d o n t h e s a l e = 8 % o f R s 1000 = \frac{8}{100} \times 1000 = R s 80 S o, V A T = T a x r e c o v e r e d o n s a l e - T a x p a i d o n p u r c h a s e = R s (80 - 64) = R s 16$
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A retailer buys an article for Rs. 800 and pays the sales tax at the rate of 8% the retailer sells the same article to a customer forRs.1, 000 and charges sales tax at the same rate. Find: the amount that the reatailer pays to the wholeseller ; the amount of VAT paid by the reatailer.

Dear student The sales tax paid by the retailer=8%of Rs800=8100×800=Rs64So, total amount paid the retailer to the wholesaler=Rs(800+64)=Rs864Tax recovered on the sale =8% of Rs 1000=8100×1000=Rs80So, VAT=Tax recovered on sale-Tax paid on purchase=Rs(80-64)=Rs16 Regards