1. Tax User Guide
  2. Building Tax Components
  3. Annexure -Tax Calculations

1.7 Annexure -Tax Calculations

Examples

Consider the following Basis Amount Structure is maintained for a tax rule.
Amount Rate
5,000 2
25,000 5
1,00,000 8
25,00,000 10
1,00,00,000 15
  1. When the above tax rule is applied on an amount of USD 18,00,000 then the tax is calculated as follows, depending on whether the Amount Basis is defined as a slab or as a tier.
    • Tier Basis:
      • The first 5,000 is taxed at rate 2%
      • Amount from 5,001 to 25,000 is taxed at rate 5%
      • Amount from 25,001 to 1,00,000 is taxed at rate 8%
      • Amount from 1,00,001 to 18,00,000 is taxed at rate 10%
    • Slab Basis:
      • The entire amount of 18,00,000 is taxed at rate 10%
  2. Consider the following scenario:
    • Counterparty: Leo
    • Participant1: Tom, Asset Ratio: 40%
    • Participant2: Bob, Asset Ratio: 60%
    • Consider a tax rule TX_1 is attached to a Fee component FEE_1, with a due amount of 30,000 USD.
    Then the tax for the participants is calculated as follows:
    • Fees for Participant1, Tom = 40% of 30,000 = 12,000 USD
    • Tax credited to Participant1, Tom = 10% of 12,000 = 1200 USD
    • Fees for Participant2, Bob = 60% of 30,000 = 18,000 USD
    • Tax credited to Participant2, Bob = 15% of 18,000 = 2700 USD
    • So, tax collected from borrower, Leo = 1200 + 2700= 3900 USD
  3. Consider the following scenario:
    • Counterparty: Leo
    • Participant1: Tom, Asset Ratio: 40%
    • Participant2: Bob, Asset Ratio: 60%
    • Consider a tax rule TX_1 is attached to a Fee component FEE_1, with a due amount of 30,000 USD.

    Assume there are no separate Tax Rates maintained for the participants Tom and Bob under Rule Master Maintenance.

    Then, the tax rate from the ALL combination record is used for tax calculation.

    Assume the tax rate for ALL combination, for the basis amount of 30,000 is maintained as 20% on a slab basis, the tax calculation is as follows:
    • Tax collected from borrower, Leo = 20% of 30,000 = 6,000 USD
    • Tax credited to Participant1, Tom = 40% of 6,000 = 2,400 USD
    • Tax credited to Participant2, Bob = 60% of 6,000 = 3,600 USD
  4. Consider the following scenario:
    • Counterparty: Leo
    • Participant1: Tom, Asset Ratio: 40%
    • Participant2: Bob, Asset Ratio: 60%
    • Consider a tax rule TX_1 is attached to a Fee component FEE_1, with a due amount of 30,000 USD.
    The basis amount structure for the combination of tax rule TX_1 and customer Tom is maintained as follows:
    • Amount Basis: Slab
    • Rule Method: Rate
    Basis Amount To Rate
    500 5
    1,000 7
    10,000 10
    15,000 15
    50,000 20
    The basis amount structure for the combination of tax rule TX_1 and customer Bob is maintained as follows:
    • Amount Basis: Slab
    • Rule Method: Rate
    Basis Amount To Rate
    5,000 5
    10,000 8
    25,000 12
    50,000 15
    5,00,00,000 20
    • Fees for Participant1, Tom = 40% of 30,000 = 12,000 USD
    • Tax rate for Tom, for a basis amount of 12,000 = 15%
    • Tax credited to Tom = 15% of 12,000 = 1800 USD
    • Fees for Participant2, Bob = 60% of 30,000 = 18,000 USD
    • Tax rate for Bob, for a basis amount of 18,000 = 12%
    • Tax credited to Bob = 12% of 18,000 = 2160 USD
    • So, tax collected from borrower, Leo = 1800 + 2160= 3960 USD
  5. Consider the following scenario:
    • Counterparty: Leo
    • Participant1: Tom, Asset Ratio: 40%
    • Participant2: Bob, Asset Ratio: 60%
    • Consider a tax rule TX_1 is attached to a Fee component FEE_1, with a due amount of 30,000 USD.
    The basis amount structure for the combination of tax rule TX_1 and customer Tom is maintained as follows:
    • Amount Basis: Slab
    • Rule Method: Rate
    • Minimum Amount: 100
    • Maximum Amount: 10,000
    Basis Amount To Rate
    1,000 10
    10,000 12
    25,000 15
    50,000 20
    The basis amount structure for the combination of tax rule TX_1 and customer Bob is maintained as follows:
    • Amount Basis: Slab
    • Rule Method: Rate
    • Minimum Amount: 100
    • Maximum Amount: 1500
    Basis Amount To Rate
    500 5
    1,000 8
    5,000 10
    20,000 12
    • Fees for Participant1, Tom = 40% of 30,000 = 12,000 USD
    • Tax rate for Tom, for a basis amount of 12,000 = 15%
    • Tax credited to Tom = 15% of 12,000 = 1800 USD
    • Fees for Participant2, Bob = 60% of 30,000 = 18,000 USD
    • Tax rate for Bob, for a basis amount of 18,000 = 12%
    • Tax credited to Bob = 12% of 18,000 = 2160 USD
    • Since the maximum amount maintained for this combination is only 1500, tax collected is = 1500 USD
    • So, tax collected from borrower, Leo = 1800 + 1500 = 3300 USD
  6. Consider the following scenario:
    • Counterparty: Leo
    • Participant1: Tom, Asset Ratio: 40%
    • Participant2: Bob, Asset Ratio: 60%
    • Consider a tax rule TX_1 is attached to a fee component FEE_1, with a due amount of 30,000 USD.
    The basis amount structure for the combination of tax rule TX_1 and customer Tom is maintained as follows:
    • Amount Basis: Slab
    • Rule Method: Flat
    Basis Amount To Flat Amount
    500 50
    1,000 200
    10,000 500
    15,000 2,000
    50,000 5,000
    The basis amount structure for the combination of tax rule TX_1 and customer Bob is maintained as follows:
    • Amount Basis: Slab
    • Rule Method: Flat
    Basis Amount To Flat Amount
    500 50
    10,000 1,000
    25,000 3,000
    50,000 8,000
    5,00,00,000 12,000
    • Fees for Participant1, Tom = 40% of 30,000 = 12,000 USD
    • Tax amount for Tom, for a basis amount of 12,000 = 2000 USD
    • Fees for Participant2, Bob = 60% of 30,000 = 18,000 USD
    • Tax amount for Bob, for a basis amount of 18,000 = 3000 USD
    • So, tax collected from borrower, Leo = 2000 + 3000 = 5000 USD
  7. Consider the following scenario:
    • Counterparty: Leo
    • Participant1: Tom, Asset Ratio: 40%
    • Participant2: Bob, Asset Ratio: 60%
    • Consider a tax rule TX_1 is attached to a fee component FEE_1, with a due amount of 30,000 USD
    The basis amount structure for the combination of tax rule TX_1 and customer Tom is maintained as follows:
    • Amount Basis: Slab
    • Rule Method: Rate
    Basis Amount To Rate
    500 5
    1,000 10
    10,000 12
    15,000 13
    50,000 16
    The basis amount structure for the combination of tax rule TX_1 and customer Bob is maintained as follows:
    • Amount Basis: Slab
    • Rule Method: Flat
    Basis Amount To Flat Amount
    5,000 500
    10,000 1,500
    25,000 2,000
    50,000 5,000
    5,00,00,000 15,000
    • Fees for Participant1, Tom = 40% of 30,000 = 12,000 USD
    • Tax rate for Tom, for a basis amount of 12,000 = 13%
    • Tax credited to Tom = 13% of 12,000 = 1560 USD
    • Fees for Participant2, Bob = 60% of 30,000 = 18,000 USD
    • Tax amount for Bob, for a basis amount of 18,000 = 2000 USD
    • So, tax collected from borrower, Leo = 1560 + 2000 = 3560 USD
  8. Consider the following scenario:
    • Counterparty: Leo
    • Participant1: Tom, Asset Ratio: 40%
    • Participant2: Bob, Asset Ratio: 60%
    • Consider a tax rule TX_1 is attached to a Fee component FEE_1, with a due amount of 30,000 USD.
    The basis amount structure for the combination of tax rule TX_1 and customer Tom is maintained as follows:
    • Amount Basis: Slab
    • Rule Method: Rate
    Basis Amount To Rate
    500 5
    1000 7
    10000 10
    15000 15
    50000 20
    The basis amount structure for the combination of tax rule TX_1 and customer Bob is maintained as follows:
    • Amount Basis: Tier
    • Rule Method: Rate
    Basis Amount To Rate
    5,000 5
    10,000 8
    25,000 12
    50,000 15
    5,00,00,000 20
    • Fees for Participant1, Tom = 40% of 30,000 = 12,000 USD
    • Tax rate for Tom, for a basis amount of 12,000 = 15%
    • Tax credited to Tom = 15% of 12,000 = 1800 USD
    • Fees for Participant2, Bob = 60% of 30,000 = 18,000 USD
    • Tax credited to Bob = (5% of 5000) + (8% of (10000-5000)) + (12% of (18000 – 10000)) = 250+400+960 = 1610 USD
    • So, tax collected from borrower, Leo = 1800 + 1610 = 3410 USD

Parent topic: Building Tax Components