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

Related entries:

You cannot comment on this entry