Explanation
To find the value-added tax (VAT), we need to calculate the tax paid on purchase and tax charged on sale, then find the difference.
Purchase price = Rs. 6890
Tax paid on purchase = 4% of 6890
= 0.04 × 6890
= Rs. 275.6
Sale price = Rs. 7900
Tax charged on sale = 6% of 7900
= 0.06 × 7900
= Rs. 474
Value-added tax (VAT) = Tax charged on sale - Tax paid on purchase
= 474 - 275.6
= Rs. 198.4