Sales Tax
Sales Tax
“The tax levied on the sale of goods within a state is called sales tax.”
Every state government needs money to meet expenses such as development of the state, payment of salaries to its employees, health, education etc. Hence, every state government levies sales tax.
The union government also levies tax, which is known as central sales tax (CST). Central sales tax is levied on the movement of goods from one state to another.
The rates of sales tax are different in different states. Sales tax is calculated on the selling price of an article.
For example:
Rachna bought some stationary costing Rs 1500. The rate of sales tax on the stationary is 5%. What is the amount paid by Rachna?
Cost of stationary = Rs 1500
Sales tax levied on it = Rs = Rs 75
Total amount paid by Rachna
= Rs 1500 + Rs 75
= Rs 1575
When a discount is given, we first calculate the discount and find the selling price and then the sales tax on the selling price. Let us solve one such example.
For example:
Radhika bought a saree whose marked price is Rs 3200. The shopkeeper gave her a discount of 10%. The rate of sales tax is 6%. What is the amount paid by Radhika?
Marked price of saree = Rs 3200
Discount = Rs
Selling price of saree = Rs 3200 − Rs 320 = Rs 2880
Sales tax = Rs
Amount paid by Radhika = Rs 2880 + Rs 172.8 = Rs 3052.8
Sometimes, there are some additional expenses on the purchase of an article due to transportation, packing, commission etc. These expenses are included in the cost price. Let solve a problem to understand this in a better manner.
For example:
Maniram purchased sweets for his daughter’s marriage. He ordered 100 packets of sweets costing Rs 123 each. The cost of packing these 100 packets is at the rate of Rs 5 per packet. The sales tax is 4 %. What is the amount paid by Maniram?
To understand how to solve such problems, look at the following video.
Example 1
Rohit buys a suitcase whose marked price is Rs 2500. The rate of sales tax is 7%.
The shopkeeper gives discount to such an extent that Rohit does not have to pay anything more than Rs 2500. What is the discount given by shopkeeper?
Solution:
Let the cost of suitcase be reduced to Rs x.
x + 7% of x = 2500
Discount = Rs 2500 − Rs 2336.45 = Rs 163.55
Thus, the discount given by the shopkeeper is Rs 163.55.
Example 2
A shopkeeper gives two successive discounts of 20% and 25% on trousers. Sumit purchases a trouser whose marked price is Rs 6000, while the sales tax on it is 12%.
How much did Sumit pay for the trouser?
Solution:
Marked price of the trouser = Rs 6000
After first discount of 20%:
Price of trouser = Rs 6000 − 20% of Rs 6000
= Rs 6000 − Rs 1200
= Rs 4800
After second disco0unt of 25%:
Price of trouser = Rs 4800 − 25% of Rs 4800
= Rs 4800 − Rs 1200
= Rs 3600
Sales tax = 12% of Rs 3600 = Rs 432
Amount paid by Sumit = Rs 3600 + Rs 432 = Rs 4032
Thus, the amount paid by Sumit for the trouser is Rs 4032.
Example 3
A trader buys an article for Rs 800 and spends 10% of its cost on transportation. He marks the article at a price that will give him 15% profit. If a customer pays Rs 1092.96 including sales tax, then what is the rate of sales tax?
Solution:
Price paid for the article = Rs 800
Overhead charges = 10% of Rs 800 = Rs 80
Cost price of the article = Rs 800 + Rs 80 = Rs 880
Profit = 15%
\ Profit = 15% of Rs 880 = Rs 132
Marked price of the article = Rs 880 + 132 = Rs 1012
Let the rate of sales tax be x%.
Money paid by the customer = Sale price of the article + Sales tax
Rs 1092.96 = Rs 1012 + x% of Rs 1012
Rs 80.96 = Rs
x = 8
Thus, the rate of sales tax is 8%.
Every state government needs money to meet expenses such as development of the state, payment of salaries to its employees, health, education etc. Hence, every state government levies sales tax.
The union government also levies tax, which is known as central sales tax (CST). Central sales tax is levied on the movement of goods from one state to another.
The rates of sales tax are different in different states. Sales tax is calculated on the selling price of an article.
For example:
Rachna bought some stationary costing Rs 1500. The rate of sales tax on the stationary is 5%. What is the amount paid by Rachna?
Cost of stationary = Rs 1500
Sales tax levied on it = Rs = Rs 75
Total amount paid by Rachna
= Rs 1500 + Rs 75
= Rs 1575
When a discount is given, we first calculate the discount and find the selling price and then the sales tax on the selling price. Let us solve one such example.
For example:
Radhika bought a saree whose marked price is Rs 3200. The shopkeeper gave her a discount of 10%. The rate of sales tax is 6%. What is the amount paid by Radhika?
Marked price of saree = Rs 3200
Discount = Rs
Selling price of saree = Rs 3200 − Rs 320 = Rs 2880
Sales tax = Rs
Amount paid by Radhika = Rs 2880 + Rs 172.8 = Rs 3052.8
Sometimes, there are some additional expenses on the purchase of an article due to transportation, packing, commission etc. These expenses are included in the cost price. Let solve a problem to understand this in a better manner.
For example:
Maniram purchased sweets for his daughter’s marriage. He ordered 100 packets of sweets costing Rs 123 each. The cost of packing these 100 packets is at the rate of Rs 5 per packet. The sales tax is 4 %. What is the amount paid by Maniram?
To understand how to solve such problems, look at the following video.
Example 1
Rohit buys a suitcase whose marked price is Rs 2500. The rate of sales tax is 7%.
The shopkeeper gives discount to such an extent that Rohit does not have to pay anything more than Rs 2500. What is the discount given by shopkeeper?
Solution:
Let the cost of suitcase be reduced to Rs x.
x + 7% of x = 2500
Discount = Rs 2500 − Rs 2336.45 = Rs 163.55
Thus, the discount given by the shopkeeper is Rs 163.55.
Example 2
A shopkeeper gives two successive discounts of 20% and 25% on trousers. Sumit purchases a trouser whose marked price is Rs 6000, while the sales tax on it is 12%.
How much did Sumit pay for the trouser?
Solution:
Marked price of the trouser = Rs 6000
After first discount of 20%:
Price of trouser = Rs 6000 − 20% of Rs 6000
= Rs 6000 − Rs 1200
= Rs 4800
After second disco0unt of 25%:
Price of trouser = Rs 4800 − 25% of Rs 4800
= Rs 4800 − Rs 1200
= Rs 3600
Sales tax = 12% of Rs 3600 = Rs 432
Amount paid by Sumit = Rs 3600 + Rs 432 = Rs 4032
Thus, the amount paid by Sumit for the trouser is Rs 4032.
Example 3
A trader buys an article for Rs 800 and spends 10% of its cost on transportation. He marks the article at a price that will give him 15% profit. If a customer pays Rs 1092.96 including sales tax, then what is the rate of sales tax?
Solution:
Price paid for the article = Rs 800
Overhead charges = 10% of Rs 800 = Rs 80
Cost price of the article = Rs 800 + Rs 80 = Rs 880
Profit = 15%
\ Profit = 15% of Rs 880 = Rs 132
Marked price of the article = Rs 880 + 132 = Rs 1012
Let the rate of sales tax be x%.
Money paid by the customer = Sale price of the article + Sales tax
Rs 1092.96 = Rs 1012 + x% of Rs 1012
Rs 80.96 = Rs
x = 8
Thus, the rate of sales tax is 8%.
rajathadri LSF Member
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