Tax Engine
  1. Special Features
Tax Engine
  • Getting Started
    • Introduction to Sales Tax Calculation
    • Step By Step - Creating your first transaction
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      • Get Sales Tax Rates
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  • Special Features
    • Global Tax Rate
    • Partial Address
    • Discounts
    • Inclusive Tax
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      POST
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    • Schemas
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      • RatesMetaData
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      • transaction Request
      • transaction Response
      • transaction
      • shippingAddress
  1. Special Features

Discounts

Understanding Discounts#

This guide explains the concept of discounts, how they affect sales prices, and provides a clear example to illustrate their application. This ensures that discounts are accurately applied, giving customers a clear understanding of the savings they receive.

What is a Discount?#

A discount is a reduction applied to the original sales price of a product or service. In our case, the discount can be offered on an item or the whole transaction as a fixed amount, reducing the total amount that the customer needs to pay.

How Discounts Work?#

Several key aspects determine the application of discounts:
Original Sales Price: The initial price of the product or service before any discount is applied.
Discount Amount/Rate: The fixed amount or rate of reduction applied to the original sales price.
Final Sales Price: The amount the customer pays after the discount is subtracted from the original sales price.

Example Calculation:#

Original Transaction-#
Item1 Price: $70
Item2 Price: $30
Original Total Transaction Price: $100
Discount Amount: $10 (Discount Rate: 10%)
Transaction After Discount-#
Item1 Price After Discount: $70 - (Item1 Price * Discount Rate) => $63
Item2 Price After Discount: $30 - (Item2 Price * Discount Rate) => $27
Total Amount Due: $100 - (Discount Amount) => $90
Therefore, with a discount amount of $10, we calculate the rate from the whole sales price, which is 10% and reduce 10% from each item price.
The discount amount on a $100 sales price is $10, leaving $90 as the final sales price.

Steps to Calculate:#

1.
Identify the Original Sales Price:
Determine the initial price of the transaction.
2.
Calculate the Discount rate:
Use the formula to determine the discount rate based on the original sales price and the discount amount.
3.
Reduce the Relative Discount from the items:
Use the formula to reduce the price of each item by applying the relative discount on the items.
4.
Determine the Final Sales Price:
Subtract the calculated discount amount from the original sales price to get the final sales price.
Modified at 2025-08-26 15:58:06
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