Question

A Shopkeeper sales an article at its marked price Rs. 7,500 and charges sales tax at the rate of 12% from the customer. If the shopkeeper pays a VAT of Rs.180, calculate the price (inclusive of tax) paid by the shopkeeper.

Answer 1

Since the shopkeeper sells the article for Rs.7,500 and changes sales tax at the rate of 12%

∴ tax charged by the shopkeeper = 12% of Rs.7500

= 12/100 x 7500 = 900

VAT = Tax charge – tax paid ,

⇒ Rs.180 = Rs.900 – Taxpaid

Tax paid by the shopkeeper = Rs. 900 – Rs.180 = Rs. 720

If the shopkeeper buys the article for Rs. x,

Tax on it = 12% of Rs.x = Rs.720 ⇒ x = Rs.6,000

∴ The price (inclusive of tax) paid by the shopkeeper = Rs.6000 + Rs.720 = Rs.6720.