Question

A bicycle is available for Rs. 7,280 including GST. If the list price of the bicycle is Rs. 6,500, find:
(i) the rate of GST.

(ii) the price, a customer will pay for the bicycle if the GST is increased by 6%.

Answer 1

Step 1: Given data:

Price of bicycle inclusive GST$=\mathrm{Rs}.7,280$

List price of bicycle$=\mathrm{Rs}.6,500$

Step 2: Calculate rate of GST:

$\begin{array}{rcl}\mathrm{GST}& =& \mathrm{Price}\mathrm{of}\mathrm{bicycle}\mathrm{inclusive}\mathrm{GST}-\mathrm{List}\mathrm{price}\mathrm{of}\mathrm{bicycle}\\ & \Rightarrow & \mathrm{GST}=7,280-6,500\\ \therefore \mathrm{GST}& =& \mathrm{Rs}.780\end{array}$

Calculate the rate of GST.

$$\begin{gathered} \mathrm{Rate}=\frac{\mathrm{GST}}{\mathrm{List}\mathrm{price}}\times 100 \\ \Rightarrow \mathrm{Rate}=\frac{780}{6,500}\times 100 \\ \therefore \mathrm{Rate}=12\% \end{gathered}$$

Step 3: Calculate the price paid by the customer:

Calculate the new rate of GST.

$\begin{array}{rcl}\mathrm{New}\mathrm{rate}\mathrm{of}\mathrm{GST}& =& 12+6\\ \therefore \mathrm{New}\mathrm{rate}\mathrm{of}\mathrm{GST}& =& 18\%\end{array}$

New price paid by the customer is computed as,

$\begin{array}{rcl}\mathrm{New}\mathrm{price}& =& 6,500+18\%\mathrm{of}6,500\\ & \Rightarrow & \mathrm{New}\mathrm{price}=6,500+\left(6,500\times \frac{18}{100}\right)\\ & \Rightarrow & \mathrm{New}\mathrm{price}=6,500+1,170\\ \therefore \mathrm{New}\mathrm{price}& =& \mathrm{Rs}.7,670\end{array}$

Hence, the rate of GST is $12\%$ and the customer has to pay $\mathrm{Rs}.7,670$ for the bicycle if the GST increases by $6\%$.