Annapurna suppliers sold construction materials costing Rs 440000 to Angel suppliers making 10% profit and adding 13% VAT. Angel suppliers spent Rs 5000 for transportation cost and made 10% profit and levied local tax Rs 2500 and sold to constructor. What VAT amount should be paid by constructor?

Soln: 
For Annapurna Suppliers,
C.P. = Rs. 440000
P% = 10%
S.P. = ?

We have,
P% = [(S.P. - C.P.)/C.P.] * 100
10  = [(S.P. - 440000)/440000] * 100
S.P. = Rs. 484000

VAT% = 13%
S.P. with VAT
= S.P. + VAT% * S.P.
= 484000 + 13% * 484000
= 546920 C.P. for Angel Suppliers

Transportation Cost = Rs. 5000
Local Tax = Rs. 2500
Total Cost = Rs. 546920 + Rs. 5000 = Rs. 551920 = C.P.1
P% = 10%
S.P.1 = ?

P% = [(S.P.1 - C.P.1)/C.P.1] * 100
10  = [(S.P.1 - 551920)/551920] * 100
S.P.1 = Rs. 607112

S.P. without VAT = Rs. 607112 + 2500 = Rs. 609612

VAT Amount
= 13% * S.P. without VAT
= 0.13 * 609612
= Rs. 79249.56