Basics of Financial Maths

Basics of Financial
Mathematics
APPLIED MATHS- CLASS 11
Simple Interesr
S.I. =
Amount = P + S. I.
PRACTICE QUESTIONS
1. What Principal will amount to Rs. 6450 in 11/2 years at 5% simple interest.
2. The simple interest on Rs. 60000 for 9 months is Rs. 2700. Find the interest rate.
3. At what rate percent per annum will Rs. 800 amounts to Rs. 1000 in 2 years.
4. At what rate percent per annum will a sum of money triple itself in 16 years?
5. In how much time will a sum of money doubles itself at 5% p.a.?
6. A sum of money lent out at simple interest amounts to Rs. 2200 in 1 year and to Rs.
2800 in 4 years. Find the sum of money and rate of interest.
7. A sum of money invested at 20% p.a. SI amounts to Rs. 650 in 1.5 years. What will it
amount to in 2 years at 12% p.a. SI?
Compound
Interest
A=P
I =A-P
1. Find the compound amount and compound interest of Rs. 20000 invested for 4 years at 6%
compounded:
i) annually ii) semi annually iii) quarterly iv) monthly
2. Find the compound interest @ 10% p.a. for 4 years on the principal which in 4 years @ 4%
p.a. gives Rs. 1600 as simple interest.
3. Find the amount of Rs. 20000 after 10 years at 8% converted quarterly for first four years
and at 6% converted monthly thereafter.
4. A sum of money doubles itself at compound interest in 15 years. In how many years will it
become 8 times.
5. At which rate of interest, compounded annually, will money double in 8 years?

Goods and
GST is an indirect tax levied on the supply of
Service Tax goods and services. It is levied at every step in
(GST) the production process, but is refunded to all
parties in the various stages of production other
than the final consumer.
INPUT GST CREDIT:
When a dealer or a firm buys some services or goods, then he pays
GST which is known as Input GST. Now the dealer or firm sells the
same service or goods to a person(customer), then the
person(customer) pays GST to the dealer or firm, the GST charged by
the dealer is output GST.
Input GST Credit = GST paid on purchases
Output GST = GST received on sales.
Net GST = Output GST - Input GST Credit

Q1.
A manufacturer sells a refrigerator to a dealer for Rs. 45000. The dealer sells it to
a customer at a profit of Rs. 4600. If the sales are intra-state and the rate of GST
is 12%, find the amount
i) of GST paid by the dealer to the state and central government.
ii) of total GST received by the state and central governments.
iii) paid by the customer to the dealer.
Q2.
A retailer buys T.V. set for Rs. 40,000 from a wholesaler at a discount of 20% on
the printed price and sells it to customers at the printed price. If the sales are intra
state and rate of GST is 12%, find
i) The price, including GST, at which T.V. set was bought by the retailer.
ii) The price at which the consumer bought the T.V. set
iii) The GST paid by the retailer
iv) The GST paid by the consumer.
GST on Inter-State sales of Goods:
A dealer in Rajasthan buys an article from a manufacturer in M.P. at discount of 12%

whose marked price is Rs. 2,50,000. The dealer sells the article to a retailer in Haryana
at a price of 32% above the marked price. If the rate of GST is 5%, find
i) The amount paid by the dealer to buy the article
ii) The IGST paid by the dealer to govt.
iii) The price at which the retailer bought the article
iv) IGST paid by the retailer
v) IGST received by the central government.
A shopkeeper in Haryana buys an article from a wholesaler in Delhi at printed price of Rs.
60,000. The shopkeeper in Haryana sells the article to a customer in Haryana at a profit of
20% on the basic cost price. If the GST is 18%, find
i) The amount paid by the shopkeeper to the wholesaler.
ii) The GST paid by the shopkeeper to the wholesaler.
iii) The amount paid by the consumer.
MISCELLANEOUS PROBLEMS:
A shopkeeper has marked Rs. 7840 as the price of an article including 12% GST on the
listed price. A buyer asks for a discount on the listed price so that after charging GST, the
selling price becomes equal to the listed price. Find the amount of discount the
shopkeeper has to offer for the deal.
Aarushi wants to buy a leather coat whose list price is Rs. 8850. She tells the
shopkeeper to reduce the price to such an extent that she has to pay Rs. 8850,
inclusive of GST. If the rate of GST is 18%, find the reduction needed in the
price of the coat
A shopkeeper purchased an article from a wholesaler at a certain price but he sells it to a
customer at the listed price of Rs. 1500. If the sales are intra-state, the rate of GST is 18%
and the shopkeeper pays Rs. 27 as CGST, find the amount inclusive of tax at which the
shopkeeper purchased the article from the wholesaler.
The tax imposed by the government on
INCOME TAX the income of an individual or group of
individuals is called income tax.
NOTE:
1. Standard deduction: Every individual salaried taxpayer was entitled to a
consolidated standard deduction of 50,000/
2. HRA: Certain portion of house rent allowance received by a salaried person is
free from income tax subject to certain conditions.
3. Taxable income: If the gross total income is less than deductions. It is on this sum
that the tax liability is calculated.
4. PAN: It is a unique 10 digit alpha numeric number on the basis of which income
tax department identifies the assessee.
5. Income tax return: After the assessee has calculated his tax liability, he is required
to file his return of income in the prescribed time and manner.
6. Tax deducted at Source(TDS): The concept of TDS was introduced with an aim to
collect tax from the very source of income.
7. Surcharge: It is charge on the tax already paid. It is charged on personal/cororate
income tax( on high income slabs and on super rich).
8. Cess: It is a form of income tax to raise funds for a specific reason. E.g.
educational cess, swatch bharat cess, Krishi Kalyan cess, etc.
Note:
List of exemptions and deductions that a tax payer will have to give up while choosing the new
tax regime.
1. Leave travel allowance
2. House rent allowance
3. Conveyance
4. Standard deduction
5. Interest on home loan
6. Deductions under section 80C, 80D, 80E and so on.
Algorithm:
1. Obtain the net taxable income, rounded off to nearesest 10/
2. Compute income tax on the taxable income in step 1 as per rates given.
3. Compute ‘Health and Education Cess = 4% of ( amount of income tax
in step 2)
4. Compute surcharge as per the rates given.
5. Use: Net tax payable = Income tax computed in step 2 + Health
education cess + Surcharge
Aarushi’s monthly salary is Rs. 2,25,000 with HRA at the rate of 20%. She
denotes Rs. 5000 per month towards P.M. relief fund getting a relief of 100% on
donation. Calculate the income tax paid by Aarushi.
During the year 2020-21, Ravish’s monthly basic salary is Rs. 1,93,800. He receives HRA
at the rate of 24% of basic salary and fixed transport allowance of Rs. 8424 per month.
His monthly contribution towards GPF is Rs. 40,000. If he pays Rs. 45,000 per month as
income tax for first 11 months, how much income tax will he pay at the end of the
financial year 2020-21?

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Basics of Financial

5. In how much time will a sum of money doubles itself at 5% p.a.?

5. At which rate of interest, compounded annually, will money double in 8 years?

Input GST Credit = GST paid on purchases

Output GST = GST received on sales.

Net GST = Output GST - Input GST Credit

A dealer in Rajasthan buys an article from a manufacturer in M.P. at discount of 12%

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