After allowing 25% discount on the marked price and then levying 10% VAT, a cycle was sold. If the discount amount was Rs 750, how much VAT was levied on the price of the cycle?

Question: After allowing 25% discount on the marked price and then levying 10% VAT, a cycle was sold. If the discount amount was Rs 750, how much VAT was levied on the price of the cycle?

Solution:

Here,

discount percentage (d%) = 25%

discount amount (d) = Rs 750

VAT % = 10%

To find: VAT amount = ?

We know,

$d% of MP = d$

$or, 25% of MP = 750$

$or, \frac{25}{100} ×  MP = 750$

$or, MP = \frac{750×100}{25}$

$\therefore MP = Rs 3000$

And,

Selling Price (SP) = MP - d

$= 3000 - 750$

$= Rs 2250$

Now,

VAT amount = VAT % of SP

$= 10% of Rs 2250$

$= \frac{10}{100} × 2250$

$= Rs 225$

Hence, the required VAT amount levied on the price of the cycle was Rs 225.