Question

The value of a car including VAT is Rs 382500. If the basic price of the car be Rs 340000, find the rate of VAT on cars.

Answer 1

Let the rate of VAT be x%. Then, we have:

$$\begin{gathered} 34000+x\%of34000=382500 \\ \Rightarrow \left(\frac{x}{100}\times 340000\right)=382500-340000 \\ \Rightarrow 3400x=42500 \\ \Rightarrow x=\frac{42500}{3400} \\ =12.5 \end{gathered}$$

∴ The rate of VAT is 12.5%.