 Welcome to the session. In this session, we will discuss sales tax and that. First, let's discuss sales tax. Sales tax is a consumption tax which has to be paid while purchasing some goods services. This additional amount that you pay is at a rate specified by the government and also the sales tax is added to the cost of peak commodity. We can also say that sales tax is an indirect tax. That is, when we purchase some specified items from the market, we have to pay certain extra amount which is at a rate specified by the government in addition to the cost of the item and that extra amount is the sales tax. Sales tax is calculated in the same way as we calculate the percentage. For example, if the cost of a CD player is given as $200, 8% is charged on the purchase of the CD player. So this means amount of sales tax would be equal to 8% of $200 that is 8 upon $100 into $200. This is equal to $16. This is the amount of sales tax. After charging a sales tax of 8%, let us now find out what would be the total cost of the CD player. This would be equal to the cost of the CD player which was $200 plus the amount of sales tax charged on it which is $16 and so this is equal to $216. This is the total cost of the CD player. So if a person wants to buy a CD player of cost $200 on which a sales tax of 8% is charged, then he will have to pay $216 to buy that CD player. Next let's discuss about that that is the value added tax is a tax on the value added to a product, material or service at each stage of the manufacturing distribution chain. Now the manufacturing chain consists of the manufacturers which could be more than one and the distribution chain consists of the distributors, the wholesalers, the retailers and after that the commodity reaches the consumer. The seller charges that to the buyer and the seller discuss that to the government. That is collected by the state governments. Let's discuss some points on computation of that that is value added tax. First we have that the VAT is calculated on the value added by the dealer. So it's supposed that the dealer buys any article or an item for $100 and he says that item for $120. Now he will pay the VAT on the value added part only which would be $120-100 that is $20. So on $20 only that would be charged. Then next we have that is charged at a specific rate on the selling price of the items discount is allowed then that is calculated on the net selling price that is the selling price of the article after deducting the discount. That is the net selling price. Like for an item if the selling price is $100 and the discount is say $20 then its net selling price would be $100-20 that is $80 and so VAT would be calculated on this net selling price. Next is a dealer pays VAT at the time of purchase he charges VAT on the selling price while selling the item. Now as the consumer is the last tax point so VAT paid by the consumer is equal to the sum of the taxes paid to the government at various stages of transaction. Here is an example in which we have that the trader buys an item wholesaler for say $1000 and it is given that the rate of VAT 5% then the VAT paid by the trader to the wholesaler is 5%. That is 5% in $2000 is the VAT paid by the trader to the wholesaler so this is equal to $50. Now if the trader buys the item to a consumer for $1200 then the VAT paid by the consumer to the trader is equivalent of $1200 that is $1200 into $500. This comes out to be equal to $60. As we have that the trader buys an item from the wholesaler for $1000 and he sells that item to the consumer for $1200 so this means that the trader has added $200 that is $1200-$1000 to the value of the item. The VAT paid by the trader to the government would be 5% of $200 which is equal to 5 upon 100 into $200 and so this is equal to $10. Now let's find out the total tax paid to the government now this would be equal to the VAT paid by the trader to the government which is $10 the VAT paid by the trader to the wholesaler which is $50. So we have $10 plus $60 and this is equal to $60 this is the total tax paid to the government. We already know that the VAT paid by the consumer is the sum of the taxes paid to the government at the various stages of transaction so this is equal to $60 that is VAT paid by the consumer is $60. So this completes the session hope you have understood the concept of sales tax and VAT.