X purchased goods worth ₹40,000 and paid VAT @ 5%. Later on, after processing and incurring ₹5,000 further expenses, he sold the goods for ₹60,000. VAT collected by him 4%. Input VAT and VAT payable by him are —

CS Executive · Tax Laws and Practice · PYQS · December 2014
X purchased goods worth ₹40,000 and paid VAT @ 5%. Later on, after processing and incurring ₹5,000 further expenses, he sold the goods for ₹60,000. VAT collected by him 4%. Input VAT and VAT payable by him are —
(A) ₹2,250; ₹150
(B) ₹2,000; ₹400
(C) ₹2,000; ₹2,400
(D) ₹2,250; ₹2,400.

Answer & Explanation:

Correct Answer: Option (B)

Correct answer: (B) ₹2,000; ₹400. Input VAT = 40,000×5% = 2,000. Output VAT = 60,000×4% = 2,400. Net payable = 400. This answer applies to the historical law and assessment-year context of this December 2014 paper; later amendments may differ.

Topics: VAT

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