PLEASE SORT OUT THIS....

CA Kanveer Singh Dhingra (Merchant Banker) (193 Points)

06 December 2009  


the question of taxation of june pcc 09 IS as follows.

question no.7(A)

Compute the VAT amount payable by Mr. A who purchases goods from a manufacturer
on payment of Rs. 2,25,000 (including VAT) and earns 10% profit on sale to retailers.
VAT rate on purchase and sale is 12.5%

I HAVE CHECKED MANY SOLLUTIONS,,EVERYONE HAVE CALCULATED THE ANSWER BY TAKING 10% GP MARGIN ON COST,EVEN ICAI IN ITS SUGGESTED ANSWERS..

BUT ITS CLEARLY GIVEN 10%GP ON SALE TO RETAILER IN THE QUESTION..

SO WE SHOULD CALCULATE  SALE CONSIDERATION LIKE THIS-
200000(PURCHASE PRICE)+10% OF X=X
ASSUMING X AS SALE CONSIDERATION

OR LIKE THIS-
200000+10%OF 200000=220000??????