A wholesaler purchased electric material for Rs. 1,50,000. He sold it to a retailer for Rs.
1,80,000. Retailer sold the same material to customer for Rs. 2,20,000. Find the M-VAT payable at
every stage of trading at the rate of 12.5%.
Last updated date: 23rd Mar 2023
•
Total views: 307.2k
•
Views today: 7.85k
Answer
307.2k+ views
Hint: The M-VAT paid is always calculated on the difference of the selling price and purchasing price of the product, which means to say the tax is calculated on the profit generated.
Complete step-by-step answer:
Firstly, the wholesaler purchased the electric material for Rs. 1,50,000 and sold that at a price of Rs.
1,80,000 to the retailer. Therefore,
Purchase price of wholesaler= \[Rs.\text{ }1,50,000\]
Selling price of wholesaler = \[Rs.\text{ }1,80,000\]
Tax rate = \[12.5%\]
Profit made by wholesaler = Selling Price – Purchase Price
$\begin{align}
& =Rs.180000-Rs.150000 \\
& =Rs.30000 \\
\end{align}$
Therefore, tax paid by the wholesaler = 12.5% of Rs. 300000
$\begin{align}
& =\dfrac{12.5}{100}\times 30000 \\
& =12.5\times 300 \\
& =Rs.3750 \\
\end{align}$
Secondly, the retailer purchased the electric material for Rs. 1,80,000 from wholesaler and sold that
at a price of Rs. 2,20,000 to customer. Therefore,
Purchase price of retailer= \[Rs.\text{ }1,80,000\]
Selling price of retailer = \[Rs.\text{ 2},20,000\]
Tax rate = \[12.5%\]
Profit made by retailer = Selling Price – Purchase Price
$\begin{align}
& =Rs.220000-Rs.180000 \\
& =Rs.40000 \\
\end{align}$
Therefore, tax paid by the retailer = 12.5% of Rs. 400000
$\begin{align}
& =\dfrac{12.5}{100}\times 40000 \\
& =12.5\times 400 \\
& =Rs.5000 \\
\end{align}$
Now customer has purchased the electric material but didn’t sold, it means he has not generated
any profit so there is no need to calculate the M-VAT payable by the customer.
Therefore, M-VAT payable at every stage of trading at the rate of 12.5% is Rs. 3750 and Rs. 5000.
Note: The chances of doing mistakes are if trying to calculate the tax on individual selling and
purchasing prices but not subtracting them afterwards.
Complete step-by-step answer:
Firstly, the wholesaler purchased the electric material for Rs. 1,50,000 and sold that at a price of Rs.
1,80,000 to the retailer. Therefore,
Purchase price of wholesaler= \[Rs.\text{ }1,50,000\]
Selling price of wholesaler = \[Rs.\text{ }1,80,000\]
Tax rate = \[12.5%\]
Profit made by wholesaler = Selling Price – Purchase Price
$\begin{align}
& =Rs.180000-Rs.150000 \\
& =Rs.30000 \\
\end{align}$
Therefore, tax paid by the wholesaler = 12.5% of Rs. 300000
$\begin{align}
& =\dfrac{12.5}{100}\times 30000 \\
& =12.5\times 300 \\
& =Rs.3750 \\
\end{align}$
Secondly, the retailer purchased the electric material for Rs. 1,80,000 from wholesaler and sold that
at a price of Rs. 2,20,000 to customer. Therefore,
Purchase price of retailer= \[Rs.\text{ }1,80,000\]
Selling price of retailer = \[Rs.\text{ 2},20,000\]
Tax rate = \[12.5%\]
Profit made by retailer = Selling Price – Purchase Price
$\begin{align}
& =Rs.220000-Rs.180000 \\
& =Rs.40000 \\
\end{align}$
Therefore, tax paid by the retailer = 12.5% of Rs. 400000
$\begin{align}
& =\dfrac{12.5}{100}\times 40000 \\
& =12.5\times 400 \\
& =Rs.5000 \\
\end{align}$
Now customer has purchased the electric material but didn’t sold, it means he has not generated
any profit so there is no need to calculate the M-VAT payable by the customer.
Therefore, M-VAT payable at every stage of trading at the rate of 12.5% is Rs. 3750 and Rs. 5000.
Note: The chances of doing mistakes are if trying to calculate the tax on individual selling and
purchasing prices but not subtracting them afterwards.
Recently Updated Pages
If ab and c are unit vectors then left ab2 right+bc2+ca2 class 12 maths JEE_Main

A rod AB of length 4 units moves horizontally when class 11 maths JEE_Main

Evaluate the value of intlimits0pi cos 3xdx A 0 B 1 class 12 maths JEE_Main

Which of the following is correct 1 nleft S cup T right class 10 maths JEE_Main

What is the area of the triangle with vertices Aleft class 11 maths JEE_Main

The coordinates of the points A and B are a0 and a0 class 11 maths JEE_Main

Trending doubts
Write an application to the principal requesting five class 10 english CBSE

Tropic of Cancer passes through how many states? Name them.

Write a letter to the principal requesting him to grant class 10 english CBSE

List out three methods of soil conservation

Fill in the blanks A 1 lakh ten thousand B 1 million class 9 maths CBSE

Write a letter to the Principal of your school to plead class 10 english CBSE

What is per capita income

Change the following sentences into negative and interrogative class 10 english CBSE

A Short Paragraph on our Country India
