A retailer purchased construction materials for Rs 2,40,000 from a dealer. He/she spent Rs 3,500 for transportation and Rs 1,500 for the local tax. If he/she sold it at a profit of Rs 24,500 to a customer, how much did the customer pay for it with 13% VAT?

Answer: Rs 3,04,535

Solution:

All expenses done on the product until it is sold to the customer is considered as Cost Price.

Here,

Purchasing cost (A) = Rs 240000

Transportation cost (B) = Rs 3500

Local Tax (C) = Rs 1500

So,

Cost Price (CP) = A + B + C

$= 240000 + 3500 + 1500$

$= Rs 245000$

And,

Profit amount (P) = Rs 24500

Now,

Selling Price (SP) = CP + P

$= Rs /245000 + Rs /24500$

$= Rs 269500$

Given,

VAT% = 13%

SP with VAT = $SP ( 1 + \frac{VAT%}{100})$

$= 269500 × \left ( 1 + \dfrac{13}{100} \right )$

$= 269500 × \dfrac{113}{100}$

$= Rs 304535$

Hence, the customer paid Rs 304,535 for the item with additional 13% VAT levied on the selling price.

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