Tax Configuration¶

Technical Process Flow Document: Sales Tax Calculations

1. Overview
This document outlines the technical process flow for sales tax calculations. The taxation system must handle multiple tax rates that can vary by product category, location, and other conditions. The configuration of taxes is stored in a structured database schema for dynamic tax computation.

2. Tax Configuration Table Structure

- Tax Configuration Table (TaxMaster):
- TaxID (Primary Key) - Unique identifier for the tax.
- TaxName - Name of the tax.
- Description - Detailed description of the tax.
- ABBR - Abbreviation for the tax.
- TaxRate - Default rate of the tax.
- OnBase - Specifies if the tax applies on base price or another tax.
- IsActive - Status indicator (Active/Inactive).
- ACID - Account ID for reference.
- TDate - Date of tax entry.
- TTime - Time of tax entry.
- uname - Username of the person making the update.

- Tax Rate Mapping Table (TaxRateMap):
- TaxID (Foreign Key) - Links to TaxMaster.
- TaxRate - Rate applicable for this mapping.
- TaxOrder - Priority/order in which the tax is applied.

- Tax Group Mapping in Product Table:
- Products are assigned to different TaxGroups based on the type of sale.
- TaxGroup determines which TaxID applies to a product.
- TaxGroup varies based on local sales, interstate sales, or export sales.
- The type of sale is determined by the customer type (local, interstate, or export).
- This mapping ensures that taxes are dynamically applied based on product and the type of customer making the purchase.

3. Sales Tax Calculation Process Flow

1. Determine Type of Sale:
- Identify the type of customer (local, interstate, export).
- Assign the appropriate TaxGroup based on the customer type.

2. Product Selection & Tax Retrieval:
- When a product is selected, its assigned TaxGroup is identified based on the sale type.
- The applicable taxes are fetched from TaxMaster and TaxRateMap based on the assigned TaxGroup, product type, and location.

3. Tax Rate Determination:
- Check if multiple taxes apply.
- Determine the sequence (TaxOrder) for computation.

4. Tax Base Calculation:
- If OnBase is true, apply tax on the base price.
- If OnBase is false, apply tax on previously calculated tax amounts (cascading tax effect).

5. Compute Total Tax Amount:
- Calculate each applicable tax: Tax Amount = (Tax Rate / 100) * Base Price.
- If multiple taxes apply, compute in the order defined by TaxOrder.

6. Total Price Computation:
- Final Price = Base Price + Total Tax Amount

7. Transaction Logging:
- Log all applied taxes along with timestamps (TDate, TTime) and user details (UID, uname).

4. Example Calculation

- Product Price: $100
- Customer Type: Interstate Sale
- Applicable Taxes:
- Central Sales Tax (CST) (8%)
- Additional State Levy (2%) applied on CST-inclusive amount

Step 1: Apply CST:
CST = (8/100) * 100 = $8

Step 2: Apply Additional State Levy on (100 + 8 = 108):
State Levy = (2/100) * 108 = $2.16

Final Price:
100 + 8 + 2.16 = $110.16

5. Error Handling & Validation
- Ensure that TaxOrder is correctly set to avoid miscalculations.
- Validate IsActive flag to prevent applying inactive taxes.
- Ensure that TaxRate is non-negative and within permissible limits.
- Verify TaxGroup mapping for products to ensure correct tax application based on the type of sale (local, interstate, export) and customer type.

6. Conclusion
This document provides a structured approach for calculating sales tax dynamically. It ensures tax compliance while offering flexibility for different tax rates and structures.