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Tax and Money Exchange

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Value Added Tax (VAT)

Q. If after allowing 20% discount and levying 13% value added tax (VAT), the value of a watch will be Rs. 904 Then Find the value marked price of the watch.

Solution:

Let the marked price of the watch be Rs.x.

So,    discount = 20% of x

                           =(20/100) * x

                           =0.2x

Now,

     Price after discount= x - 0.2x                                                           = 0.8x 

 So,     VAT amount = 13% of 0.8x

                                    = (13/100) * 0.8x

                                    =0.104 x

(ii) Now, 

 Price including VAT =0.8x + 0.104x

                                      =0.904x

(iii) By question,

                     0.904x = 904                                         or,    x = 904/0.904                                       or,    x = 1000

Hence, the marked price of the watch is Rs. 1000.