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Question
A shopkeeper buys an article for ₹ 12000 and marks up its price by 25%. The shopkeeper gives a discount of 10% on the marked up price. He gives a further off-season discount of 5% on the balance. But the sales tax (under VAT) is charged at 8% on the remaining price. Find:
- The amount of VAT that a customer has to pay.
- The final price he has to pay for the article.
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Solution
The cost price of an article = ₹ 12000
Rate of mark up in price = 25%
∴ Marked price
= `("C.P." xx (100 + 25))/(100)`
= `(12000 xx 125)/(100)`
= ₹ 15000
Rate of discount = 10%
Rate off-season discount = 5%
∴ Sale price
= `("M.P." xx (100 - "discount"%))/(100)`
= `(15000(100 - 10) xx (100 - 5))/(100 xx 100)`
= ₹ `(15000 xx 90 xx 95)/(100 xx 100)`
= ₹ 12825
Rate of sales tax = 8%
∴ Amount of sales tax
= ₹ `(12825 xx 8)/(100)`
= ₹ 1026
(i) Amount of sales tax
= ₹ 1026
(ii) Price to be paid
= ₹ 12825 + ₹ 1026
= ₹ 13851
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