Question

A shopkeeper purchases an article for $6200Rs$ and sells it to customers for $8500Rs$. If sales tax is $8\% $, find the VAT paid by the shopkeeper?

Answer 1

Hint: Note down all the given values that are given in the question. Find the Tax paid by the shopkeeper and Tax charged by the shopkeeper. The difference between those two would be the VAT paid by the shopkeeper.

Complete step-by-step answer:
It is mentioned in the question that A shopkeeper purchases an article for $6200Rs$ and sells it to customers for $8500Rs$. Sales tax is $8\% $.
So,
Purchase price of the shopkeeper that is the Cost price we can say is $6,200Rs$
Selling price of the article is $8,500Rs$.
Now,
Tax paid by the shopkeeper is calculated on the cost price of the article.
So, Tax paid by the shopkeeper $ = 8\% $ of $6,200$ $ = \dfrac{8}{{100}} \times 6200$
 $
   = 8 \times 62 \\
   = 496Rs \\
 $
But the Tax that is charged by the shopkeeper will be decided on the selling price of the article.
Similarly, Tax charged by the shopkeeper $ = 8\% $ of $6,200$ $ = \dfrac{8}{{100}} \times 8500$
    $
   = 8 \times 85 \\
   = 680Rs \\
 $
At last we got two Tax values, Now, to get the VAT value just take the difference between them. Because the VAT refers to the Value Added Tax that should be decided on the selling price too.
Hence VAT paid by the shopkeeper $ = $ Tax charged by shopkeeper $ - $ Tax paid by the shopkeeper.
We have already derived the above values. Let us substitute them here to get the VAT value.
Hence VAT paid by the shopkeeper $ = 680 - 496 = 184Rs $
So, the VAT paid by the shopkeeper is $184Rs$.

Note: When you look at these kinds of problems, be careful in looking whether they have mentioned the cost price or selling price. Because mostly they use terms like purchasing price for the shopkeeper or for the customer. In that situation pay attention in note downing the values.