VAT AND NHIL

NATIONAL HEALTH INSURANCE LEVY(NHIL) is a tax charged on some goods and services for the provision of health care services in Ghana. The rate NHIL in 2½% of the basic cost of the goods and services. All proceeds are channelled into a special fund set asidd for the National Health Insurance Scheme.

EXAMPLE ;
The VAT and NHIL, inclusive marked price of a television set is GH¢517.50.If the VAT and the NHIL are charged at rates of 12.5% and 2.5% respectively, find;
a. The cost of the television set(VAT and NHIL exclusive)
b. The NHIL charged
c. The VAT charged

SOLUTION

a. Cost of the television(VAT and NHIL inclusive) = GH¢517.50

VAT rate=12.5%;     NHIL rate=2.5%

Total rate=12.5%+2.5% =15%

Cost of the television(VAT and NHIL inclusive) is equivalent to

100% + 15%=150%

Cost of the television(VAT and NHIL exclusive) is equivalent to 100%

If 115%=GH¢517.50

then 100%=100/115 Х GH¢517.50

                   =GH¢450

The cosr of the television (VAT and NHIL exclusive) =GH¢450.00

b. The amount charged for NHIL 

=2.5% of GH¢450

=2.5/100  Х  GH¢450

=GH¢11.25

c. The amount charged for VAT 

=12.5% of GH¢450

=12.5/100  Х  GH¢450

=GH¢56.25

END OF LESSON EXERCISE 

1. The VAT and NHIL inclusive marked price of a standing fan is GH¢50.00 .If the VAT and the NHIL are charged at rates of 12.5% and 2.5% respectively. Find

i. the cost of the fan(VAT and NHIL exclusive)

ii. the NHIL charged

iii. the VAT charged