[5 marks sum]

Question 15 Marks

In the tax period ended March 2015, M/S Hari Singh & Sons purchased floor tiles worth ₹ 800000 taxable at 7.5% and sanitary fittings worth ₹ 750000 taxable at 10%. During this period, the sales turnover for floor tiles and sanitary fittings is worth ₹ 840000 and ₹ 920000 respectively. However, the floor tiles worth ₹ 60000 were returned by the firm during the same period. Calculate the tax liability (under VAT) of the firm for this tax period.

Answer

Cost of floor tiles $=\text { ₹ } 800000$
Rate of tax $=7.5 \%$
$
\begin{aligned}
& =\frac{15}{2} \% \\
& \therefore \text { VAT }
\end{aligned}
$
$
\begin{aligned}
& =\frac{800000 \times 15}{100 \times 2} \\
& =\text { ₹ } 60000
\end{aligned}
$
Cost of sanitary fittings $=\text { ₹ } 750000$
Rate of VAT $=10 \%$
Total VAT
$
\begin{aligned}
& =\text { ₹ }750000 \times \frac{10}{100}=\text { ₹ } 75000 \\
& \therefore \text { Total input } \\
& =\text { ₹ } 60000+\text { ₹ }75000 \\
& =\text { ₹ } 135000
\end{aligned}
$
On the sale of floor tiles for $=\text { ₹ } 840000$
Rate of VAT $=\frac{15}{2} \%$
Total VAT
$
\begin{aligned}
& =840000 \times \frac{15}{100 \times 2} \\
& =\text { ₹ } 63000
\end{aligned}
$
and on sale of sanitary fittings = \text { ₹ }920000
Rate of VAT $=10 \%$
$\therefore$ Total VAT
= \text { ₹ } $920000 \times \frac{10}{100}=\text { ₹ } 92000$
Total input tax
$
\begin{aligned}
& =\text { ₹ } 63000+\text { ₹ } 92000 \\
& =\text { ₹ }155000
\end{aligned}
$
Return of floor tiles worth
$
=\text { ₹ } 60000
$
Liability of tax of the firm
$=155000-(135000+4500)$
$=\text { ₹ } 155000$ - \text { ₹ }139500
$=\text { ₹ } 15500$.

View full question & answer→

Question 25 Marks

A manufacturer listed the price of his goods at ₹ 160 per article. He allowed a discount of 25% to a wholesaler who in his turn allowed a discount of 20% on the listed price to a retailer. The rate of sales tax on the goods is 10%. If the retailer sells one article to a consumer at a discount of 5% on the listed price, then find
(i) the VAT paid by the wholesaler.
(ii) the VAT paid by the retailer.
(iii) the VAT received by the Government.

Answer

List price $( MP )$ of the goods $=\text { ₹ } 160$ per article
Rate of discount $=25 \%$
S.P.
$
\begin{aligned}
& =\frac{ MP \times(100- D \%)}{100} \\
& =\text { ₹ }\frac{160(100-25)}{100} \\
& =\text { ₹ } \frac{160 \times 75}{100} \\
& =\text { ₹ } 120
\end{aligned}
$
Rate of VAT $=10 \%$
$\therefore$ Total VAT
$
\begin{aligned}
& =\text { ₹ } \frac{120 \times 10}{100} \\
& =\text { ₹ }12
\end{aligned}
$
Now S.P. of wholesaler $=\text { ₹ } 160$
Rate of discount $=20 \%$
$\therefore$ Net S.P.
$
\begin{aligned}
& =\text { ₹ } \frac{160 \times(100-20)}{100} \\
& =\text { ₹ } \frac{160 \times 80}{100} \\
& =\text { ₹ }128
\end{aligned}
$
Rate of VAT $=10 \%$
$\therefore$ Total VAT
$
=\text { ₹ } \frac{128 \times 10}{100}
$
$=\text { ₹ }12.80$
Total S.P.
$=\text { ₹ } 128+\text { ₹ }12.80$
$=\text { ₹ }140.8$
Now S.P. of the retailer $=\text { ₹ } 160$
Net S.P.
$
\begin{aligned}
& =\text { ₹ } \frac{160 \times(100-5)}{100} \\
& =\text { ₹ } \frac{160 \times 95}{100} \\
& =\text { ₹ } 152
\end{aligned}
$
VAT at the rate of $10 \%$
$
\begin{aligned}
& =\text { ₹ } \frac{152 \times 10}{100} \\
& =\text { ₹ } 15.20
\end{aligned}
$
(i) VAT paid by the wholesaler
$
\begin{aligned}
& =\text { ₹ } 12.80-\text { ₹ } 12 \\
& =\text { ₹ }0.80
\end{aligned}
$
(ii) VAT paid by the retailer
$
\begin{aligned}
& =15.20-12.80 \\
& =\text { ₹ } 2.40
\end{aligned}
$
(iii) Total VAT paid to the Govt.
$
=\text { ₹ } 15.20 \text {. }
$

View full question & answer→

Question 35 Marks

A retailer buys an article at a discount of 15% on the printed price from a wholesaler. He marks up the price by 10%. Due to competition in the market, he allows a discount of 5% to a buyer. If the buyer pays ₹451.44 for the article inclusive of sales tax (under VAT) at 8%, find :
(i) the printed price of the article
(ii) the profit percentage of the retailer.

Answer

(i) Let the printed price of the article = ₹100
Then, retailer’s cost price
= ₹100-₹15 = ₹85
Now, marked price for the retailer
= ₹100 + ₹10 = ₹110
Rate of discount allowed = 5%
∴ Sale price
$\begin{aligned}
& =\text { ₹ } \frac{110 \times(100-5)}{100} \\
& =\text { ₹ } \frac{110 \times 95}{100} \\
& =\text { ₹ } \frac{1045}{10}
\end{aligned}$
$\therefore$ Sale price including sales tax
$\begin{aligned}
& =\text { ₹ } \frac{1045}{10} \times \frac{100+8}{100} \\
& =\text₹ \frac{1045 \times 108}{1000}
\end{aligned}$
Now, if the buyers pays ₹ $\frac{1045 \times 108}{1000}$
then printed price $=\text { ₹ }100$
and if buyer pays $\text { ₹ } 451.44$, then printed price
$
\begin{aligned}
& =\text { ₹ }\frac{100 \times 451.44 \times 1000}{1045 \times 105} \\
& =\frac{100 \times 45144 \times 1000}{100 \times 1045 \times 108} \\
& =\text { ₹ } 400
\end{aligned}
$
$\therefore$ Printed price $=\text { ₹ }400$
(ii) Now, gain of the retailer
$
=\text { S.P. }- \text { C.P. }
$
$
=\text { ₹ } \frac{1045}{10}-\frac{85}{1}
$
$
=\frac{1045-850}{10}
$
$
=\text { ₹ } \frac{195}{10}
$
$\therefore$ Gain percent
$
=\frac{\text { Total gain } \times 100}{\text { C.P. }}
$
$
=\frac{195 \times 100}{10 \times 85}
$
$
=\frac{390}{17}
$
$
=22 \frac{16}{17} \%
$

View full question & answer→

Mathematics [5 marks sum]

Test yourself on this topic