What comes first tax or discount?

[Former Member]

I have a doubt what comes first....

Is domestic tax calculated and added to the price or is the discount done on the price first...Can someone help me with this help me with this?.

[Former Member · Accepted solution]

It depends on customizing step you made for your company code in Financial Accounting.

Path is IMG / Financial Accounting / Accts Receivable and Accts Payable / Business Transactions / Outgoing invoices credit memos /define cash discount base for outgoing invoices

If you don't check the indicator for your company code, it indicates that tax on sales/purchases is not included in the base amount used for calculating cash discount.

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[former_member217082]

Hi nazim

Generally discounts are calculated on the price and then tax is calculated on the net value

But if the client requirement is different then we need to configure our pricing procedure in a different way

Regards

Srinath

[Former Member]

I don't know much about it, and I think you are right, but I just wanted to clear a doubt..My doubt is....

I thought it is only the service tax which is calculated on the net value;

so is it that all taxes are calculated on net value?

Thank you in advance,

Nazim.

[Former Member]

Depends on clients requirement. You can have discount on Gross or you can have discount on Net value.

Tax will always be on the net amount.

Thanks

[Former Member]

Pricing elements are divided into four categories:

Prices

Surcharges and Discounts

Freight Costs

Sales Taxes