# Manoj buys a leather coat cost Rs 900.at Rs.990 after paying the VAT. Calculate the rate of VAT charged on the coat?

Answer

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**Hint:**Use the fact that the VAT% is the VAT amount divided by the cost price of a product. The formula for it is as follows

\[VAT\%=\dfrac{VAT\ amount}{\cos t\ price}\times 100\]

Now, in this question, we will simply put the values of the respective terms and then we will get the value for the desired value.

Also, the VAT amount is nothing but the new cost price minus the old cost price that is

VAT amount= cost price – the old cost price.

**Complete step by step answer:**

As mentioned in the question, we have to find the VAT% for the transaction.

Now, we can see that before VAT addition, the cost price is Rs. 900 and after VAT addition, the cost price is Rs. 990.

Hence, we can write the following

VAT amount=Rs.(990-900)

So, on using the formula that is mentioned in the hint, we get the following result

\[\begin{align}

& \Rightarrow VAT\%=\dfrac{VAT\ amount}{\cos t\ price}\times 100 \\

& \Rightarrow VAT\%=\dfrac{90}{900}\times 100=10\% \\

\end{align}\]

**Hence, the VAT % in this transaction is 10%.**

**Note:**In this question, it is very important to know all the formulae beforehand and also, the calculations should also be done very carefully as there are very high chances that the students might commit a mistake while solving the question and getting to a solution.

One should have knowledge about VAT(Value Added Tax).

Also, without having clarity in the formulae one could never get to the solution.

Last updated date: 28th Sep 2023

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