Ali purchase a motorcycle in Rs. 52900. He paid the 5% tax on it. Ali sold that motorcycle in Rs. 53500 and he charged tax 7% on it. Find the value added tax on it?
Answer: Rs. 1100
Explanation
To find the value-added tax (VAT), we need to calculate the tax paid and charged, then find the difference.
Step 1: Calculate the tax paid on purchase
Tax paid = 5% of Rs. 52900 = 0.05 * 52900 = Rs. 2645
Step 2: Calculate the tax charged on sale
Tax charged = 7% of Rs. 53500 = 0.07 * 53500 = Rs. 3745
Step 3: Calculate the value-added tax (VAT)
VAT = Tax charged - Tax paid = Rs. 3745 - Rs. 2645 = Rs. 1100
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