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Question

A shopkeeper purchased an item of Rs 100 at 8% VAT and sells it at Rs 120 to the customer and customer also pays 8% VAT to the shopkeeper. How much amount did the shopkeeper deposit to the Government as VAT ?

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Solution

ShopkeeperCustomerC.P.Rs 100Rs 120VAT=8% Tax chargedVATChargedRs 8Rs 9.60VATpaidtothegovernmentRs 8Rs 1.60
Total VAT paid to the government = Rs 8 + Rs 1.6 = Rs 19.2

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