Question

A manufacturer buys raw materials for 40000 and pays sales tax 4% .He sells the ready stock for 78000 and charges sales tax at the rate of 7.5% .Find the VAT paid by the manufacturer.

Answer 1

Assuming that all the prices are inclusive of VAT.

Purchases ( excluding VAT ) = 40000/104% = 38,461/-
So, VAT paid= 1,539/-

Sales ( excluding VAT ) = 78000/107.5% = 72,558/-
So VAT payable would be 5,422/-

NET VAT payable = 5422-1539= 3,903/- is VAT paid by manufacturer

Answer 2

Answer:

ANSWER

VAT=Output tax-Input tax

Intput tax=4% of 60,000=

100

4

×60000=Rs.2400

Output tax=12.5% of 92000=

100

12.5

×92000=11500

VAT=11500−2400=Rs.9100