Question

A colour TV is available for Rs 13340 inclusive of VAT. If the original cost of TV is Rs 12000, find the rate of VAT.

Answer 1

Hint: In the above given question, calculate the VAT value which can be obtained by subtracting the original cost, that is without VAT value from the cost with the inclusion of the VAT value, then the VAT percentage can be taken by dividing the VAT value to the original cost of the TV.

Complete step-by-step answer:
The cost of colour TV including VAT =Rs 13340
The original cost of colour TV = Rs 12000
So, the VAT included can be given as the difference between the cost of the colour TV including VAT and the cost of the colour TV without VAT, that is,
 =Rs (13340−12000)
=Rs 1440
The VAT percentage can be calculated as
${\text{VAT % = }}\dfrac{{{\text{VAT}}}}{{{\text{Cost}}}} \times 100$
$ = \dfrac{{1440}}{{12000}} \times 100$
$ = 12\% $
Therefore, the rate of VAT is 12%.

Note: The value-added tax (VAT) is the amount that the user pays on the cost of the product. This is usually calculated in percentage only. The answer can be verified by converting the percentage value and adding it to the original cost.