Question

The sales tax to be paid for an article is Rs 13500 . A surcharge of \(8 \%\) of the sales tax was also payable. Find the total tax payable (in \(\mathrm{Rs}\) ). (1) 14580 (2) 12420 (3) 12960 (4) 14040

Short answer

Answer: (1) 14,580

Step-by-step solution

Find the surcharge on the sales tax

To find the surcharge, we need to calculate 8% of the sales tax which is Rs 13500. Surcharge = \((8/100) \times 13500\)

Calculate the surcharge

Now, calculate the surcharge value: Surcharge = \((8/100) \times 13500 = 1080\)

Find the total tax payable

Now, add the sales tax and the surcharge to find the total tax payable: Total tax payable = Sales tax + Surcharge Total tax payable = 13500 + 1080

Calculate the total tax payable

Now, calculate the total tax payable value: Total tax payable = 13500 + 1080 = 14580

Compare the result with the given options

The total tax payable is Rs 14580, which matches with option (1). Therefore, the correct answer is (1) 14580.

Key concepts

Sales Tax

Understanding sales tax is essential when calculating the total cost of purchased goods or services. It's a percentage of the price of the item that is added on by the seller, and then remitted to the government. Typically, the sales tax rate is set by each local jurisdiction and varies from place to place.

To calculate the sales tax on an item, you simply multiply the cost of the item by the sales tax rate. For instance, if you buy a gadget for Rs 1,50,000 with a sales tax rate of 9%, the sales tax would be Rs 1,50,000 multiplied by 0.09, equaling Rs 13,500.

However, sales tax can become more complex when additional charges are added, such as a surcharge. It’s these additional complexities that frequently cause confusion, but by applying systematic mathematical operations, one can accurately determine the total tax payable.

Percentage Surcharge

A surcharge is an additional charge or tax that is added to the cost of a good or service. It's expressed as a percentage of another cost; in this case, the sales tax already determined. Surcharges are often levied to cover the increased costs or as an indirect way for the government to collect more revenue.

Within the context of our problem, if the sales tax is Rs 13,500 and there is an 8% surcharge, the mathematical operation to find the surcharge amount is to calculate 8% of Rs 13,500. This is where understanding percentage calculations becomes important. By mastering how to calculate a percentage of a number, students can adeptly handle surcharges and other similar financial calculations that frequently appear in everyday life as well as in academia.

Mathematical Operations

Mathematical operations are fundamental procedures executed with numbers, involving addition, subtraction, multiplication, and division. In financial calculations, such as determining total tax payable, we use these basic operations to combine different taxes and fees. A strong grasp of these operations allows individuals to accurately work out problems involving financial transactions, such as taxes.

In the given exercise, after firstly calculating the 8% surcharge on the sales tax using multiplication, we add it to the original sales tax to find the total tax payable. The formula for the total tax is thus: Total Tax Payable = Original Sales Tax + (Surcharge Percent / 100) * Original Sales Tax.

Practical Example

Utilizing this formula, if the sales tax is Rs 13,500 and the surcharge is 8%, the total tax payable is Rs 13,500 + (8 / 100 * 13,500), resulting in Rs 14,580. This type of calculation is an invaluable skill for scenarios that involve complex billing processes, ensuring individuals are prepared to manage their finances correctly.