Question

A shopkeeper buys an article at a discount of $30\%$ from the wholesaler (the printed price of the article being Rs. 2,000) and paid sales-tax at the rate of $8\%$. The shopkeeper sells the article to a buyer at the printed price and charges tax at the same rate. Find the VAT (Value Added Tax) paid by the shopkeeper.

Answer 1

Given that, printed price of the article is $Rs.2,000$
and, discount $=30\%$

Hence, the shopkeeper paid $70\%$ of the printed price, which is

$=\frac{70}{100}\times 2,000=Rs.1400$

It is also given that the shopkeeper paid a sales-tax at $8\%$

$\therefore$Sales-tax $=\frac{8}{100}\times 1,400=Rs.112$
Given that, the shopkeeper sells the article at the printed price of $Rs.2,000$ and charges tax at the same rate of $8\%$

$\therefore$ Tax charged by the shopkeeper $=\frac{8}{100}\times 2,000=Rs.160$
$\therefore$ VAT paid by the shopkeeper = Tax charged - Tax paid
$\Rightarrow Rs.160-Rs.112=Rs.48$

Hence, the shopkeeper paid a VAT of $Rs.48$