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Question

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
[3 MARKS]

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Solution

Each subpart: 1 Mark

The printed price of an article = Rs 60,000
Discount given by wholesaler =20%
Total discount =60,000×20100=Rs 12,000
So, selling price =Rs 60,000Rs 12,000=Rs 48,000
VAT=Rs48,000×6100=Rs 2,2880
VAT paid to wholesaler by shopkeeper = Rs 2,880
(i) Cost to the shopkeeper inclusive of tax = Rs 48,000 + Rs 2,880 = Rs 50,880
(ii) VAT paid to shopkeeper by customer =Rs60,000×6100=Rs 3,600
VAT paid by shopkeeper to the Government = Rs 3,600Rs 2,880=Rs 720
(iii) Cost to the customer inclusive of tax =Rs 60,000+Rs 3,600=Rs 63,600

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