In a particular year , shopkeeper purchased goods worth ₹ 4,00,000 and paid a total tax of ₹ 40000. During the same year, he sold all the goods purchased as below :
(i) goods worth ₹ 25,000 at 5% tax,
(ii) goods worth ₹ 3,60,000 at 12% tax and
(iii) goods worth ₹ 15000 which are exempted from tax.
Calculate the tax liability (under VAT) for the year under consideration.

₹ 40000

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₹ 5700

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₹ 3800

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₹ 2500

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Solution

The correct option is B
₹ 5700

Turnover of goods taxable at 5% = ₹ 25,000
Tax charged = 5% of 25,000
= ₹ 1250

Turnover of goods taxable at 12% = ₹ 3,60,000
Tax charged = 12% of 3,60,000
= 43,200

Tax exempted sale = ₹ 15000
Total tax charged = ₹ 2500 + ₹ 43200
= ₹ 45,700
Tax paid = ₹ 40,000 (Given)

Therefore, Tax liability (under VAT) = Total tax charged - tax paid
= ₹ (45,700 - 40,000)
= ₹ 5700

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