Sales tax

Tax Glossary Definition

Sales tax

A sales tax is a consumption-based tax applied as a percentage of the selling price of goods and, in some cases, services. Although the consumer bears the financial burden, the seller or retailer is responsible for collecting the tax at the time of sale and remitting it to the government. The applicable rate may differ across states, regions, or jurisdictions, depending on local tax laws.

Example: If an item is sold for ₹1,000 at a 10% sales tax rate, the customer pays ₹1,100, and the seller forwards ₹100 to the respective tax authority.

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