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Class 10 > A retailer buys an article from the wholesaler at Rs....
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A retailer buys an article from the wholesaler at Rs. 80 and the wholesaler charges a sales tax at the prescribed rate of 8%. The retailer fixes the price at Rs. 100 and charges sales tax at the same rate. Apply value added tax system of sales tax calculation to answer the following questions. What is the price that a consumer has to pay to buy the article and also find the input tax and output tax for the retailer?

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+2 Sales Tax and VAT

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Price for the customer 100 + 8% VAT = 108 Input Tax for retailer = 8% on 80 = 6.4 Output Tax = 8% on (100-80) = 1.6.
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