GATE 2025 EC – Question 10
An organization allows its employees to work independently on consultancy projects but charges an overhead on the consulting fee. The overhead is 20% of the consulting fee, if the fee is up to ₹ 5,00,000. For higher fees, the overhead is ₹ 1,00,000 plus 10% of the amount by which the fee exceeds ₹ 5,00,000. The government charges a Goods and Services Tax of 18% on the total amount (the consulting fee plus the overhead). An employee of the organization charges this entire amount, i.e., the consulting fee, overhead, and tax, to the client. If the client cannot pay more than ₹ 10,00,000, what is the maximum consulting fee that the employee can charge?
Practise this question in The GATE Grind →
Show answer and explanation
Correct answer: (B) ₹ 7,24,961
Explanation
Let the fee be $f$. The client pays $1.18\,(f+\text{overhead})\le 10{,}00{,}000$, so $f+\text{overhead}\le 8{,}47{,}457.6$. If $f\le 5$ lakh, $1.2f\le 8.47$ lakh would allow $f\approx 7.06$ lakh, which contradicts $f\le 5$ lakh, so $f>5$ lakh. Then $f+1{,}00{,}000+0.1(f-5{,}00{,}000)=1.1f+50{,}000\le 8{,}47{,}457.6$, giving $f\le 7{,}24{,}961$.