The printed price of an article is Rs. $60, 000$ . The wholesaler allows a discount of $20 %$ to the shopkeeper. The shopkeeper sells the article to the customer at the printed price. Sales tax (under VAT) is charged at the rate of $6 %$ at every stage.
Find:
(i) the cost to the shopkeeper inclusive of tax.
(ii) VAT paid by the shopkeeper to the Government.
(iii) the cost to the customer inclusive of tax.

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Solution

Printed price of the article $=$ Rs. $60, 000$
Discount offered $= 20 %$
Therefore, cost price for the shopkeeper $=$ Rs. $60, 000 \times (1 - \frac{20}{100}) =$ Rs. $48, 000$
(i) Cost price inclusive of VAT $= 48, 000 + (48, 000 \times \frac{6}{100}) =$ Rs. $50, 880$

(ii) VAT paid by the shopkeeper to the government $=$ Tax charged on sale $-$ Tax paid on sale $= 60, 000 \times \frac{6}{100} - 48, 000 \times \frac{6}{100} =$ $3600 - 2, 880 =$ Rs. $720$

(iii) Cost to the customer $= 60, 000 + (60, 000 \times \frac{6}{100}) =$ Rs. $63, 600$

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