ID #1828

How can the Tax be calculated on the actual item rate even after giving the discount?

Scenario:

We are charging tax on actual item rate instead of discounted rate.

For example: Item Rate = Rs.100/-, Discount = 50%, Tax = Service Tax @10.30%.

  • Discount Amount = Rs.50.00
  • Tax = 10.30 (10.30% of Rs.100/-)
  • Total Amount = 100.00 – 50.00 + 10.30 = Rs.60.30

   

Solution:

Tax can be charged both on actual item rate or discounted item rate. Please follow the steps given below:

 

Step 1: Create Tax Master:

  1. From main menu go to the Tax Master (M > A > T)
  2. Create the tax master as shown in the picture below:
Tax on rate

  

Step 2: Setting for tax to be calculated on actual rate:

  1. In the Tax Master set Calculation Method = Quantity * Rate
  2. Set Included in Rate = Yes / No as required, for detail please see below imgaes.
Tax Cal Method

Sub Total = Rate, Item Discount = Rate * Disc%,  Tax Total = Rate * Tax%.

  

Tax Cal Method

Sub Total = Rate - Tax, Item Discount = Subtotal * Disc%,  Tax Total = Rate - (Rate*100/110.30).

 

OR

  

Step 2: Setting for tax to be calculated on discounted rate:

  1. In the Tax Master set Calculation Method = Default
  2. Set Included in Rate = Yes / No as required, for detail please see below imgaes.
Tax Cal Method

Sub Total = Rate, Item Discount = Rate * Disc %,  Tax Total = (Sub Total – Item Discount) * Tax %.

  

Tax Cal Method

Sub Total = Rate – Tax Total, Item Discount = Rate * Disc %,  Tax Total = (Sub Total – Item Discount) * Tax %.

  

Tags: Tax, Tax Calculation Method, Tax Master

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