Sales Tax at a Glance: All the basics that you need to know

Sales Tax can be calculated by various factors like state rates, local rates, etc. It depends on State and Local law and rules for goods and services. Sales Tax does not come under the “national” or “Federal” taxes.

Factors Affecting Sales Tax Rate:

There are so many factors which can affect to calculate Sales Tax rate are under as below:

  • State Rates:

Each state has its own state-wise sales tax rate. It is used for paying the budget items like public safety and roads etc. The range of state tax range usually between 4-7%.

  • Local Rates:

In some states, they are also allowing the local area like country and city as well as. In this sales tax, the local tax rate should also be included.

  • Special Taxing District Rates:

Some of the states also having another type of rate like a Special taxing district. It is the same as state tax where it is used as a sales tax just to paying for improvement of public safety etc. They can also increase the tax if they have any budget crunch, like to create parks, new schools, etc.

Sales Tax Calculation:

Sales Tax to be calculated from its basic formula which is given below:

Sales Tax = Net Price *(Percentage Sales Tax/100)

Total Cost = Net Price + Sales Tax

where,

          Net Price is the price tag before any type of Sales Tax can be applied.

          Total Price is the price which is the final amount paid by the consumer after including Sales Tax.

How to Calculate Sales tax?

The calculation for Sales Tax is very much easy and its concept of percentage is very much small.

Every government of the country needs the money for the following purposes:

  • Should have to meet their expenses with administrative.
  • To execute the development scheme and social welfare as well.
  • Should have to meet their expenses on the salary of their employees etc.

If the sales tax is an indirect tax that can be imposed by the government. The formula is under given below:

S= P(1+R/100), Where S= Selling price, R = Rate of Sales Tax,

then Sales TAX = S – P = (PR/100), Where S= Selling price, R = Rate of Sales Tax, P = Printed Price.

Conclusion

Sales Tax are the indirect type of sales which include State Tax, Local Tax, etc. When the consumer buying the product then they have to pay all the taxes and the total price includes all the taxes.

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