Suhani pays tax at the rate of 30% on her entire income of Rs 90,000, and Ritika pays tax at the rate of 40% on her entire income of Rs y. If the overall tax rate on their combined income comes to 37%, then what is the value of y?
Show answer & explanation
Correct answer: D
Explanation
The correct answer is option 4 i.e. Rs 2,10,000.
Suhani's income = Rs 90,000
Tax paid by Suhani = 30% of 90000
Ritika pays tax at the rate of 40% on her entire income of Rs y.
The overall tax rate on their combined income = 37%
According to the question,
⇒ 30% of 90000 + 40% of y = 37% of (90000 + y)
⇒ 27000 + 0.4y = 33300 + 0.37y
⇒ 0.4y - 0.37y = 33300 - 27000
⇒ 0.03y = 6300
⇒ y = 2,10,000