Question

Solve the car of the government.​

Answer 1

kindly see in the attached pic.

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Answer 2

Answer:

A retailer purchases an article for Rs 100 from the wholesaler. The wholesaler charges a sales tax at the rate of 10% on it as prescribed by the government for that variety of articles. Thus, the retailer pays Rs 100 + 10% of Rs 100, i.e., Rs 100+Rs 10 (=Rs 110) to the wholesaler to have the article. The wholesaler gets Rs 100 and he pays Rs 10 to the government as sales tax. The retailer sells the article for Rs 120 to the consumer and charges a sales tax of 10% on it as prescribed by the government. Thus, the consumer pays Rs 120 + 10% of Rs 120, i.e., Rs 120+Rs 12 (=Rs 132) to the retailer to get the article. The retailer gets Rs 120+Rs 10, i.e., Rs 130 after paying Rs 12-Rs 10, i.e., Rs 2 as sales tax to the government. In this way the retailer pays 10% of (sale price-cost price), i.e., (Rs 120-Rs 100) to the government. Thus the retailer pays the tax on the added (raised) value of the article only. So, the value-added tax (VAT) for the retailer in this case is Rs 2. The above example may be summarized as below:

For the retailer, we have:

Purchase price = Rs 100

Tax paid on purchase = Rs 10 (This tax is called input tax.)

Sale price = Rs 120

Tax payable on sale price = Rs 12 (This tax is called output tax.)

Input tax credit = Rs 10

So, VAT payable by the retailer = output tax-input tax=Rs 12-Rs10=Rs 2

Thanks for the question.