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Swarna paid Rs. 20 as VAT on a pair of shoes worth Rs.250. Find the rate of VAT.

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14%

34%

10%

answer is D.

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Detailed Solution

Given,
Selling price=Rs.250.
Amount of value added tax=Rs.20.
Let the rate of value-added tax be X%.
Now,

Amount of value added tax = selling price × rate of value added tax 100 ⇒ Rs .20 = Rs .250 × X 100 ⇒ X = 100 × 20 250 ⇒ X = 2000250 ⇒ X = 8 %

Hence, the rate of value-added tax is 8%.
Therefore, option (4) is correct.

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