In each shirt, merchant gives $25\%$ rebate

means in each shirt $32 \times \dfrac{1}{4} = rs. \hspace{0.1cm}8 $ rebate.

So, $\color{Violet}{\text{In order to get a rebate of rs. 40 . one needs to buy}}$ $\color{purple}{\dfrac{40}{8}= 5 \hspace{0.1cm}shirts} $