problem on VAT

Compute the VAT payable at each stage using ‘Invoice method from the particulars given below:
Particulars PROFIT (as % of Cost)
X sold the medicines
manufactured by it to
the distributors of
medicines-Y-at Rs. 4000 ------

II Y sold the medicines
to the Wholesalers-Z 56.25%

III Z sold the medicines
to the Retailers-A 25%

IV A sold the medicines
to the ultimate Consumers 25%

Assume that the VAT rate is 4% and that there was no value addition at various stages of sale except profit margin

you can also leave your ans at my id hereforeducation @ rediffmail.com

Replies (1)
Originally posted by : ABHINANDAN JAIN


Compute the VAT payable at each stage using ‘Invoice method from the particulars given below:
Particulars PROFIT (as % of Cost)
X sold the medicines
manufactured by it to
the distributors of
medicines-Y-at Rs. 4000 ------ 4000*4% = 160 = 4160

vat Liability 160

II Y sold the medicines
to the Wholesalers-Z 56.25% ............... 4160*156.25%=6500*4% =260 =6760

Vat Liability 260 - 160 input credit = 100


III Z sold the medicines
to the Retailers-A 25% ......................... 6760*125% = 8450*4%=338+8450=8788

Vat Liability 338 - 260 Input credit = 78


IV A sold the medicines
to the ultimate Consumers 25% .....8788*125%=10985*4% =439.40+10985=11424.40

Vat Liability 439.40 - 338 =101.40 

Assume that the VAT rate is 4% and that there was no value addition at various stages of sale except profit margin

you can also leave your ans at my id hereforeducation @ rediffmail.com

assumed that all the dealers are registered and availing input credit 

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