The marked price of an article is Rs.10,000. A buys it at 30% discount on the marked price and sells it at 10% discount on the marked price. If the rate of tax under VAT is 5%, find the amount of VAT paid by A.

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Solution

M.P. of an article = Rs. 10,000
A purchased it at discount of = 30%
C.P. of an article
= M.P. - $\frac{Discount rate \times M.P.}{100}$
= Rs.10,000 - $\frac{30 \times 10, 000}{100}$
= Rs.10,000 - Rs.300 = Rs. 7000
Tax rate = 5%
Tax paid by A = C.P. $\times \frac{T a x r a t e}{100}$
= Rs. 7000 $\times \frac{5}{100} = R s . 350$
Now, A sold the article at 10% discount
\therefore S.P. of an article
= M.P. - $\frac{Discount rate \times M.P.}{100}$
= Rs. 10,000 - $\frac{10 \times 10, 000}{100}$
= Rs. 10,000 - Rs. 1000 = Rs. 9000
Tax charged by A = S.P. $\times \frac{T a x r a t e}{100}$
= Rs. 9000 $\times \frac{5}{100}$ = Rs. 450
\therefore VAT paid by A =Tax charged -Tax paid
= Rs. 450- Rs.350 = Rs.100

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