The price of watch including 10% VAT is rupees 825.what is its basic price?
Answers
10/100×825
82.5
Now basic price of vat=825-82.5
= 742.5 ans
Answer:
Price of watch including VAT = Rs. 825
VAT % = 10 %
∴Basic price=Total price×(100)100
+VAT
=Rs.825
× 100 100+10
=825×100
110
=Rs.750
Step-by-step explanation:
Price of watch including VAT = Rs. 825
VAT % = 10 %
∴Basic price=Total price×(100)100
+VAT
=Rs.825
× 100 100+10
=825×100
110
=Rs.750
Price of watch including VAT = Rs. 825
VAT % = 10 %
∴Basic price=Total price×(100)100
+VAT
=Rs.825
× 100 100+10
=825×100
110
=Rs.750
Price of watch including VAT = Rs. 825
VAT % = 10 %
∴Basic price=Total price×(100)100
+VAT
=Rs.825
× 100 100+10
=825×100
110
=Rs.750
Value-added tax (VAT) is a consumption tax on goods and services that is levied at each stage of the supply chain where value is added, from initial production to the point of sale. The amount of VAT the user pays is based on the cost of the product minus any costs of materials in the product that have already been taxed at a previous stage.
KEY TAKEAWAYS
Value-added tax, or VAT, is added to a product at every point of the supply chain where value is added to it.
Advocates of VATs claim that they raise government revenues without punishing the wealthy by charging them more through an income tax. Critics say that VATs place an undue economic burden on lower-income taxpayers.
Although many industrialized countries have VAT, the United States is not one of them.
Understanding Value-Added Tax (VAT)
VAT is based on consumption rather than income. In contrast to a progressive income tax, which levies more taxes on the wealthy, VAT is charged equally on every purchase. More than 160 countries use a VAT system. It is most commonly found in the European Union (EU). Nevertheless, it is not without controversy.
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Advocates say VAT raises government revenues without charging wealthy taxpayers more, as income taxes do. It also is considered simpler and more standardized than a traditional sales tax, with fewer compliance issues.
Critics argue that VAT is essentially a regressive tax that places an undue economic burden on lower-income consumers while increasing the bureaucratic burden on businesses. Both critics and proponents of VAT generally argue it being an alternative to income tax. That is not necessarily the case because many countries have both an income tax and a VAT.
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How a Value-Added Tax Works
VAT is levied on the gross margin at each point in the process of manufacturing, distributing, and selling an item. The tax is assessed and collected at each stage. That is different from a sales tax system, in which the tax is assessed and paid only by the consumer at the very end of the supply chain.
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Say, for example, a candy called Dulce is manufactured and sold in the imaginary country of Alexia. Alexia has a 10% VAT.
Here is how the VAT would work:
Dulce’s manufacturer buys the raw materials for $2, plus a VAT of 20 cents—payable to the government of Alexia—for a total price of $2.20.
The manufacturer then sells Dulce to a retailer for $5 plus a VAT of 50 cents, for a total of $5.50. The manufacturer renders only 30 cents to Alexia, which is the total VAT at this point, minus the prior VAT charged by the raw material supplier. Note that the 30 cents also equal 10% of the manufacturer’s gross margin of $3.
Finally, a retailer sells Dulce to consumers for $10 plus a VAT of $1, for a total of $11. The retailer renders 50 cents to Alexia, which is the total VAT at this point ($1), minus the prior 50-cent VAT charged by the manufacturer. The 50 cents also represent 10% of the retailer’s gross margin on Dulce.
History of the Value-Added Tax
VAT was largely a European creation. It was introduced by French tax authority Maurice Lauré in 1954, although the idea of taxing each stage of the production process was said to have first been floated a century earlier in Germany.
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The vast majority of industrialized countries that make up the Organisation for Economic Co-operation and Development (OECD) have a VAT system. The United States remains a notable exception.
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