How To Calculate Sales Tax in Pakistan

How To Calculate Sales Tax in Pakistan: It's sort of normal nowadays to know how much an object would cost before we purchase it. It is not as easy as simply staring at and charging for the price tag; income tax has stepped in the void to assess expense profits for both the consumer and the seller.
It's no secret that the sales tax rates are rising, making the tax impact on a purchase greater. Let's look at those practical measures that can help us assess the sales tax on our previous, or potential shopping transactions. Get up!

Sales tax is one of the financial institutions' most important facets of the net industry and market trade. Sales tax can, in most cases, help you calculate the total cost of every item on your grocery list. Let's try and understand this concept with an example below.

  • Let Item cost = $60
  • Let Sales Tax Rate = 7.5%
What is the total sales tax on the item?
According to a mathematical formula,
Total Sales Tax = Item Cost x Sales Tax Rate
                                                                      = 60 x 7.5%
 = 60 0.075
                                            Total Sales Tax = $4.50
By determining the sales tax, you can quickly calculate the total cost of the item, which in this case is nothing but a simple arithmetic calculation:
                                            Total Cost = Item Cost + Total Sales Tax                                                              = $60 + $4.50 = $64.50
For the sake of your understanding, let’s have a look at another example:
Q. I want to buy a new phone from a marketplace in Islamabad. I have my mindset on getting the new Samsung Galaxy S20 Ultra, which costs Rs 220,000. If the Total cost of the phone in Islamabad is 252,000 rupees, what is the sales tax rate in Islamabad?
Sounds complicated, doesn’t it?
It is actually quite simple. Take a look:
Item Cost = Rs 220,000
Total Cost= Rs 252,000
Sales Tax Rate =??
Total Cost = Item Cost + Total Sales Tax                                     Rs 252,000 = Rs 220,000 + Total Sales Tax
252,000 – 220,000 = Total Sales Tax
Therefore:                            Total Sales Tax = Rs 32,000
Now, we have determined the total sales tax. But what is the rate? Again, a simple solution:
                                            Total Sales Tax = Item Cost x Sales Tax Rate
32,000 = 220,000 x Sales Tax Rate
0.1454 = Sales Tax Rate

Sales Tax Rate = 14.54%
This is quite simple, isn’t it? This is how you determine Sales Tax or Sales Tax Rates!
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