Question

A shopkeeper purchase an article for Rs. 6,200 and sells it to a customer for Rs. 8,500. If the sales-tax (under VAT) is 8%; find the VAT paid by the shopkeeper.

• A. Rs. 184
• B. Rs. 196
• C. Rs. 204
• D. Rs. 218

Answer 1

The correct option is A Rs. 184

VAT=Output tax-input tax

Output tax= Tax realised by the retailer from the consumer

Out put tax$=8\%of8500$

$\Rightarrow \frac{8}{100}\times 8500=Rs.680$

Input tax= Tax paid by the retailer to the wholesaler

Input Tax$=8\%of6200$

$\Rightarrow \frac{8}{100}\times 6200=Rs.496$

$VAT=680-496=Rs.184$