Question

I purchased a hair dryer for Rs. 5400 including 8% VAT. Find the price before VAT was added.

Answer 1

Hint: Take x as normal or original price. So, after adding 8% tax, we get $x+\dfrac{8}{100}x$ or $\dfrac{108x}{100}$ which we can equate with Rs 5400 to get the answer.

Complete step-by-step answer:
In the question it is said that I purchased a hair dryer for Rs. 5400 including 8% VAT, we have to find the price before VAT was added.
Before proceeding let us know briefly what a VAT is.
A value added tax (VAT or V.A.T), known in some countries as goods and service tax (GST), is a type of tax that is assessed incrementally. It is levied on the price of product or service at each stage of production, distribution or sale to the end user. If the ultimate consumer is a business which collects and pays to the government VAT on its product or services, it can reclaim the tax paid. It is similar to and often compared to sales tax.
As the question says that Rs 5400 contains 8% tax. So, we can suppose that the original price was ‘x’. After adding 8% tax its price becomes $x+\dfrac{8}{100}\times x$ which on calculation equals $\dfrac{108x}{100}$ .
So, according to the question we can say that,
$\dfrac{108}{100}x=5400$
Hence, x is $5400\times \dfrac{100}{108}$ which on calculation equals to Rs 5000.
So, the price before V.A.T was Rs. 5000.

Note: Students generally confuse between these types of terms related to taxes. So, they can directly treat any type of tax as normal tax because in this type of problem all questions are treated the same.