Question

An article has been bought by a distributor for Rs. 18000 (excluding tax). He sold it to a trader for Rs. 22000 (excluding tax). The trader sold the article to the retailer for Rs. 24000 (excluding tax). Then, find the VAT paid by the distributor and trader, given the tax rate is 10%.

• A. Rs. 180, Rs. 240 respectively
  
• B. Rs. 400, Rs. 200 respectively
  
• C. Rs. 200, Rs. 400 respectively
  
• D. Rs. 240, Rs. 180 respectively

Answer 1

The correct option is B

Rs. 400, Rs. 200 respectively

For distributor
C.P= Rs. 18000
Tax paid 10% of Rs. 18000 = $\frac{10}{100}\times Rs.18000$
=Rs. 1800
S.P of article = Rs. 22000
Tax charged= 10% of Rs. 22000
=$\frac{10}{100}\times Rs.22000$
=Rs. 2200
VAT paid by distributor= Tax charged - Tax paid
=Rs. 2200 - Rs. 1800
=Rs. 400
For trader
C.P= Rs. 22000 (S.P of distributor= C.P of trade)
S.P= Rs. 24000
Tax paid= 10% of Rs. 22000
$=\frac{10}{100}\times 22000=Rs.2200$
Tax charged = 10% of Rs. 24000
$=\frac{10}{100}\times 24000$
=Rs. 2400
VAT paid by the trader= Tax charged - Tax paid
=Rs. 2400 - Rs. 2200
=Rs. 200