Leela buys an article for ₹ 12000 and pays 7% tax. She sells the same article for ₹ 15000 and charges 9% tax. Find the VAT paid by Leela

₹ 840

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₹ 1350

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₹ 550

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₹ 510

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Solution

The correct option is D
₹ 510

Cost of the article = ₹ 12000

Tax paid by Leela = 7% of ₹ 12000

= ₹ $\frac{7}{100} \times$ 12000

= ₹ 840

Selling price of the article = ₹ 15000

Tax charged at 9% = 9% of 15000

= ₹ $\frac{9}{100} \times$ 15000

= ₹ 1350

Therefore, VAT = tax recovered on sale - Tax paid on purchase.

= ₹ 1350- ₹ 840

= ₹ 510

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