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Question

A shopkeeper buys an article at a discount of 30% and pays sales-tax at the rate of 8%. The shopkeeper, in turn, sells the article to a customer at the printed price and charges sales tax at the same rate. If the printed price of the article is Rs. 2,500; find:

(i) the price paid by the shopkeeper

(ii) the price paid by the customer

(ii) the VAT (Value Added Tax) paid by the shopkeeper.

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Solution

The correct option is **A** (i) Rs. 1,890 (ii) Rs. 2,700 (iii) Rs. 60

(i)The amount paid by shopkeeper

(i)The amount paid by shopkeeper

List Price=Rs.2500

Discount rate=30%

Discount=30% of 2500=30100×2500=Rs.750

Then the price of the article after discount=2500−750=Rs.1750

Rate of sales tax=8%

∴Tax paid by the shopkeeper=8% of 1750

⇒8100×1750=Rs.140

∴ shopkeeper paid the amount =1750+140=Rs.1890

(ii)The shopkeeper sell the article at printed price to the customer at 6% sales tax

∴ sales tax paid by the customer =8% of 2500=8100×2500=Rs.200

Then the price paisd by the customer=2500+200=Rs.2700

(iii)VAT paid by the shopkeeper

VAT=tax paid by the customer-Tax paid by the shopkeeper

VAT=200−140=Rs.60

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