If an employee's income is ₹72,000, the amount he spends is 40% higher than his savings. Therefore, his savings (in ₹) is:

Correct — A. The phrase "40% higher than his savings" makes savings the base, so savings is the unknown to name.

Let savings = S.
Spending = S + 40% of S = 1.4S

Income is spending plus savings:
1.4S + S = 72,000
2.4S = 72,000
S = 72,000 ÷ 2.4 = 30,000 → option (a).

Check: spending = 1.4 × 30,000 = 42,000, and 42,000 + 30,000 = 72,000.

Why the others are wrong

• (b)
  32000 — Savings of 32,000 leaves spending of 40,000, and 40,000 is only 25% higher than 32,000. The stem needs 40%.
• (c)
  34000 — Savings of 34,000 leaves spending of 38,000, which is about 11.8% higher than 34,000 — nowhere near the required 40%.
• (d)
  28000 — Savings of 28,000 leaves spending of 44,000, which is about 57% higher than 28,000. That overshoots the 40% the stem fixes.

"A is 40% higher than B" always means A = 1.4B. The base of the percentage is B, the thing being compared against.

Here spending is compared against savings, so savings is the base and spending is 1.4S. Name savings S and everything else follows.

Income splits into exactly two parts, so S + 1.4S = 2.4S equals the income. Equivalently, spending to savings is 7 : 5, which is 1.4 written as a fraction.

Whenever a percentage names its base explicitly, resist taking that percentage of the income instead.

Key facts

• '40% higher than X' means 1.4X, with X as the base of the comparison.
• Spending to savings here is 7 : 5, so the 12 parts of ₹72,000 are worth ₹6,000 each.
• Savings is ₹30,000 and spending is ₹42,000, which together make the ₹72,000 income.

Common traps

• Taking 40% of the income instead of 40% of the savings.
• Splitting ₹72,000 in the ratio 40 : 60 because the figure 40 appears in the stem.
• Dividing the income by 1.4 rather than by 2.4.

No directly related past PYQ was found.