TAX

[keyur_mistry1]

What is Inclusive and Exclusive TAX.

How system will calculate it?

Ex:- $ 100 for that TAx - 12%.

[Former Member]

Hi Keyur,

A tax-exclusive tax rate refers to the amount of tax paid as a proportion of the pretax value of whatever is taxed; sales tax rates are typically expressed in tax-exclusive terms. A tax-inclusive rate, conversely, refers to the amount of tax paid as a proportion of the after-tax value; income tax rates are often expressed in tax-inclusive terms. Thus the difference between the two definitions is whether or not the tax paid is included in the denominator when calculating the tax rate.

Some tax systems include the taxes owed in the tax base (tax-inclusive), while other tax systems do not include taxes owed as part of the base (tax-exclusive) suppose a good costs $100 before tax and has a $30 sales tax. The tax-exclusive tax rate would be 30 percent, since the tax is 30 percent of the pre-tax selling price. The tax-inclusive rate would be about 23 percent, which is obtained by dividing the $30 tax by the total cost to the consumer ($100 + $30).

The tax-inclusive rate will always be lower than the tax-exclusive rate, and the difference grows as the rates rise.

Regards,

[keyur_mistry1]

Good Job Rahul,

But this thing already i read on other site. Actually i don't get so finally i decide to post question here.

This contain is copy past from other site.

I don't want this kind of answer.

In your words if you can clear my doubt then welcome.

what ever example u mention here that is also copy past.

What example i asked and what u gave here?

How this 23 % is coming all that without any explanation mention here. n u post same here.

http://www.taxpolicycenter.org/briefing-book/improve/retail/exclusive-inclusive.cfm

this is the link Right?

Express your own word, examples and clear doubt. Reward will b good point.

[Former Member]

Yes Keyur you are right. i pasted the content from the mentioned link as i found it simple and adequate. To give you more clarity on the calculation part,

Material Cost = $100

Tax amount = $30

therefore tax exclusive rate is calculated as (30/100)*100 = 30%

Again,

Material Cost = $100

Tax amount = $30

Tax Inclusive rate is calculated as (30/130)*100 = 23.076%

For your Example:

Material Cost = $100

Tax amount = 12% or $12

Tax Exclusive Rate = 12%

Tax Inclusive Rate =  10.714%

[keyur_mistry1]

Thank u very much i get Idea from example.