1.8.2.1 How a Scheme Works

A class in a scheme will remain effective till another class for the same component, but with a different Effective Date, is encountered.

The following example illustrates how the different classes in a tax scheme, defined for the same component is applied.

For example,

You have defined the following Tax classes (only the fields relevant to the example are discussed):

Tax Class 1

Class Code	Brok_clas1
Effective Date	1 January 1999 (defined for the associated tax rule)
Basis Amount	Brokerage Amount
Tax Rate	0.5% (defined for the associated tax rule)

Tax Class 2

Class Code	Brok_clas2
Effective Date	1 April 1999 (defined for the associated tax rule)
Basis Amount	Brokerage Amount
Tax Rate	0.75% (defined for the associated tax rule)

When these classes are linked to a single tax scheme, the tax will be applied in the following manner:

• From 1 January 1999 to 31 March 1999, the brokerage paid on contracts will be taxed at 0.5%. From 1 April 1999 onwards, the brokerage paid will be taxed at 0.75%.
• Brokerage will continue to be taxed at 0.75% till another class with a different Effective Date is added to the scheme.