The printed price of an article is ₹ 60000.

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The printed price of an article is ₹ 60000. The wholesaler allows a discount of 20% to the shopkeeper. The shopkeeper sells the article to the customer at the printed price. Sales tax (under VAT) is charged at the rate of 6% at every stage. Find:

(i) the cost to the shopkeeper inclusive of tax.
(ii) VAT paid by the shopkeeper to the Government.
(iii) the cost to the customer inclusive of tax.

Solution:

Printed price of an article = ₹ 60000
Rate of discount allowed = 20%
Total discount = ₹ 60000 x \frac { 20 }{ 100 } = ₹ 12000
S.P. after discount = ₹ 60000 – ₹ 12000 = ₹ 48000
Rate of VAT = 6%
(i) Amount paid by the shopkeeper
= ₹ 48000 + ₹ 48000 x \frac { 6 }{ 100 }
= ₹ 48000 + ₹ 2880 = ₹ 50880
(ii) The price at which the shopkeeper sold to the customer = ₹ 60000
Profit = ₹ 60000 – ₹ 48000 = ₹ 12000
VAT paid by the customer to the Govt.
= ₹ 12000 x \frac { 6 }{ 100 } = ₹ 720
(iii) Total cost to the customer = ₹ 60000 + VAT inclusive of tax
= ₹ 60000 + \frac { 60000 x 6 }{ 100 }
= ₹ 60000 + ₹ 3600 = ₹ 63600

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