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Standard X

Mathematics

Comparison Between Sales Tax and VAT

A shopkeeper ...

Question

A shopkeeper sells an article at its marked price of ₹ 7500 and charges sales-tax at the rate of 12% from the customer. If the shopkeeper pays a VAT of ₹ 180, calculate the price inclusive of tax paid by the shopkeeper.

₹ 6000

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₹ 6720

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₹ 6500

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₹ 7000

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Solution

The correct option is B
₹ 6720

Marked price of the article = ₹ 7500

Rate of sales tax = 12%.

Therefore, the tax charged by the shopkeeper = 12% of ₹ 7500

= ₹ 900

Since, VAT = Tax charged – Tax paid

∴ ₹ 180 = ₹ 900 – Tax paid

Or, Tax paid by the shopkeeper = ₹ 900 - ₹ 180 = ₹ 720

Let the price paid by the shopkeeper for the article for ₹ $x$

Tax on it = 12% of $x$ = ₹ 720

Or, $\frac{12}{100}$ × $x$ = ₹ 720

Or, $x$ = ₹ 6000

Therefore, the price inclusive of tax paid by the shopkeeper = ₹ 6000 + ₹ 720 = ₹ 6720

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