A manufacturing company sold a commodity to its distributor for Rs.22

1.	A manufacturing company sold a commodity to its distributor for Rs.22,000 including VAT. The distributor sold the commodity to a retailer for Rs.22,000 excluding tax and the retailer sold it to the customer for Rs. 25,000 plan tax (under VAT). If the rate of tax is 10%. What was the: (i) Sale price of the commodity for the manufacture? (ii) An amount of tax received by the state government on the sale of the commodity?
Answer» (i) Let the price of the commodity for the manufacture be Rs. x, tax is 10%. ∴ tax charged by the manufactures = 10% of C.P = 10x/100 10x/100 x + 10x/100 = 22, 000 ⇒ x = (22000 x 100)/110 = 20,000 ∴ The sale price of the commodity for the manufacture = 20,000 (ii) VAT collected by the manufacture = tax charged by the manufacture = 10x/100 = (10 x 20000)/100 = 2, 000 = tax paid by the distributor since the distributor has sold the commodity tot he retailer for Rs.22,000 ∴ tax collected by the distributor = 10% of 22,000 = 10/100 × 22000 = Rs.2200 = paid by retailer VAT to be deposited by the distributor = Rs.2200 – Rs.2000 = Rs.200 Tax collected by retailer = 10% of 25000 = 10/100 × 25,000 = ‘2500 ∴ VAT to be paid by the retailer = Rs.2500 – Rs.2200 = Rs.300 ∴ Amount of the (under VAT) received by the state government = Rs.2000 + Rs.200 + Rs.300 = Rs.2500

A manufacturing company sold a commodity to its distributor for Rs.22,000 including VAT. The distributor sold the commodity to a retailer for Rs.22,000 excluding tax and the retailer sold it to the customer for Rs. 25,000 plan tax (under VAT). If the rate of tax is 10%. What was the: (i) Sale price of the commodity for the manufacture? (ii) An amount of tax received by the state government on the sale of the commodity?

Answer»

(i) Let the price of the commodity for the manufacture be Rs. x, tax is 10%.

∴ tax charged by the manufactures = 10% of C.P

= 10x/100 10x/100

x + 10x/100 = 22, 000

⇒ x = (22000 x 100)/110 = 20,000

∴ The sale price of the commodity for the manufacture = 20,000

(ii) VAT collected by the manufacture = tax charged by the manufacture

= 10x/100 = (10 x 20000)/100 = 2, 000 = tax paid by the distributor

since the distributor has sold the commodity tot he retailer for Rs.22,000

∴ tax collected by the distributor = 10% of 22,000

= 10/100 × 22000 = Rs.2200 = paid by retailer

VAT to be deposited by the distributor = Rs.2200 – Rs.2000 = Rs.200

Tax collected by retailer = 10% of 25000

= 10/100 × 25,000 = ‘2500

∴ VAT to be paid by the retailer = Rs.2500 – Rs.2200 = Rs.300

∴ Amount of the (under VAT) received by the state government

= Rs.2000 + Rs.200 + Rs.300 = Rs.2500