Question

# Karuna bought 10g of gold for Rs.15,756 including VAT at 1%. What is the rate of gold per 10g excluding VAT.

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Hint: VAT stands for value added tax. It is an amount that is included with the selling price of any object. So, assume the rate of gold per 10g as variable. Now, proceed further and use the given information to get the value of the variable.

Let us suppose ‘x’ is the rate of the gold per 10g.
It is given that VAT is 1% and Rs.15,756 is the total price of gold for 10g including the value added tax(1%).
And hence amount of VAT on Rs.x i.e., original price can be calculated as
(VAT) value = 1% of x
$VAT=1\times \dfrac{x}{100}=\dfrac{x}{100}Rs$
Hence, according to the condition, we can get an equation as
$x+\dfrac{x}{100}=15756$
Or
$\dfrac{100x+x}{100}=15756$
$x=\dfrac{15756\times 100}{101}$
x = Rs.15600
Hence, ‘x’ was representing the original price of 10gm gold. So, the original price of gold per 10gm can be given as Rs. 15600 excluding the VAT.

Note: One can use direct formula of VAT as
Total cost = price + VAT amount
VAT amount = VAT% of Selling Price.
We need to calculate the rate per 10g of gold. So take care of it as well. One may divide the price by 10 as well but which will represent the rate of gold per gm not per 10gm. Hence, be careful with the word problems.