Selling price of motorbike to the manufacture = Rs 30600 + Rs 1,000 = Rs 31600
Amount of tax collected by manufacture A
= 12.5% of Rs 31600
= 12.5*31600/100 = 3950
Dealer B earns a profit of Rs 1000, so the value added by dealer B is Rs 1000.
Amount of VAT to be paid by B = 12.5% of Rs 1000 = 12.5*1000/100 = 125
Dealer C earns a profit of Rs 1000, so the value added by dealer C is Rs 1000.
Amount of VAT to be paid by C = 12.5% of Rs 1000 = 12.5 *1000/100 = 125
D earns a profit of Rs 1000, so the value added by D is Rs 1000.
Amount of VAT to be paid by D = 12.5% of Rs 1000 = 12.5*1000/100 = 125
Total amount of VAT paid = Rs 3950 + Rs 125 + Rs 125 + Rs 125 = Rs 4325
(2)
Value of motorbike paid by the consumer
= Rs 31600 + Rs 1000 + Rs 1000 + Rs 1000
= Rs 34600
Tax paid by the consumer
= 12.5% of Rs 34,600
12.5 *34600/100 = 4325
∴ Amount paid by the consumer = Rs 34600 + Rs 4325 = Rs 38925
Regards
Arun (askIITians forum expert)
