Hi,
The following is the invoice to a retailer from a distributor. The distributor adds VAT to his selling price of Rs.56.71 (which includes his margin). Now the retailer pays 65.72 with 15%VAT(Gujarat) and sell the product at Rs.75 making 15% for himself.
The question- The company adds profit to the cost price and then adds VAT and sells it to the distributor. The distributor in turn adds his margin and VAT before selling to retailer. Now the retailer does not add margin and VAT to sell it to the consumer. So his 15% is what-Profit or VAT he paid to get the product from the distributor.
Please Explain how retailer benefits from this.
| Piece.price | MRP | Gross.Amt | VAT% | VAT.Amt | VAT.ADD% | VAT.ADD.Amt | Net.Amt |
| 56.71 | 75 | 56.71 | 12.50 | 7.09 | 2.50 | 1.42 | 65.72 |
Thanks
CAclubindia
