A manufacturer lists the price of the goods at Rs.240 per article. The wholesaler gets a discount of 25% on the goods from the manufacturer.
The retailers are allowed a discount of 15% on the list price by the wholesaler. The prescribe rate of sale tax at all stages is 8%. A customer buys an article from the retailer at the listed price.
Find the VAT paid by the retailer & wholesale
To find the VAT paid by the retailer and wholesaler, we need to calculate the final selling price at each stage and then calculate the VAT based on the prescribed rate of 8%.
First, let's calculate the selling price to the wholesaler after the 25% discount given by the manufacturer.
Discount given to the wholesaler = 25% of Rs. 240 = (25/100) * 240 = Rs. 60
Selling price to the wholesaler = List price - Discount = Rs. 240 - Rs. 60 = Rs. 180
Now, let's calculate the selling price to the retailer after the 15% discount given by the wholesaler.
Discount given to the retailer = 15% of Rs. 180 = (15/100) * 180 = Rs. 27
Selling price to the retailer = List price - Discount = Rs. 180 - Rs. 27 = Rs. 153
Next, we will calculate the VAT paid by the retailer and wholesaler based on the prescribed rate of 8%.
VAT paid by the wholesaler = 8% of selling price to the wholesaler = (8/100) * Rs. 180 = Rs. 14.40
VAT paid by the retailer = 8% of selling price to the retailer = (8/100) * Rs. 153 = Rs. 12.24
Therefore, the VAT paid by the retailer is Rs. 12.24 and the wholesaler is Rs. 14.40.