Question

‘A’ is manufacture of electric iron. The cost price of each electric iron in Rs 1,600. He sells to ‘B’and ‘B’sells to ‘C’ and ‘C’ sells to ‘C’ sells to ‘D’ the retailer. The tax rate is 12.5% and the profit is Rs 150 at each stage of the selling chain. Find the

(i) the total amount of VAT and

(ii) the amount that the purchased will have to pay.

Answer 1

Amount that the retailer will have to pay is

= 2200 + 275 = 2475

Total amount of vat = 21875 + 3(18.75)

= 218.75 + 56.25 = Rs 275.