Indirect Taxes being the foundation of Sales Tax
Taxation is one thing no one of us loves at any cost. There might be some fool who wants to pay his/her hard-earned money?
But then why did the most popular government increase the taxation percentage and what do we get in return?
There might be several more questions pondering in your brain over this complex Subject.
Okay, let us break it up easy for you today. Yes, we will get to know the basics of taxation and will relate sales tax with it.
Taxation in a country is basically of two types – one is direct taxation; another is indirect taxation. In one case the government makes the person directly pay for his earnings, whereas in the other the government levies a tax on all transactions of business happening in the country.
Now, what does the government does with all this? It uses the money in the administration and the development of the nation.
- Sales Tax: The most prominent indirect tax
Sales tax is a form of tax that is paid for the consumption of various goods and services is life at the point of sale collected by the retailer and the government. The tax rates completely depend on the law in the jurisdiction.
It houses the majority of the indirect revenue taxation scheme.
- Understand how to calculate sales tax?
When someone buys a product, some goods or services they need to make sure how much will be the price they have to pay after a listed price, as well as a sales tax but, will be charged on the purchase of some goods and services that is a simple formula to calculate sales tax at is selling price * sales tax rate the sales tax rate differs from country to country.
For example, Manisha has purchased a book that cost of Dollar 50, and the business tax rate is 7% to calculate sales tax that Manisha must pay it’s helpful to convert sales tax from a percentage into decimal in a 7% tax rate would become 0.07 when it is converted so the amount of sale starts at Manisha must pay on purchase is dollar 3.50 so the total sale amount is equal to selling price + Sales Tax so once the sales tax is calculated Manisha must pay dollar 50 3.50 on the purchase of a book.
Are you still worried about the ways to calculate sales tax, you can use a sales tax calculator or can consult a sales tax practitioner, even the persons with multi income sources get their books for sales tax audited by chartered accountants.