1. What is Reverse Sales Tax Calculation?

Reverse sales tax calculation determines the original price before tax was added, given the total amount paid. This is particularly useful for businesses and individuals who need to determine the pre-tax value of goods or services in Pakistan where the standard FBR sales tax rate is 18% (2024-2025).

2. How Does the Calculator Work?

The calculator uses the reverse sales tax formula:

Where:

• Total Amount — The final amount paid including tax (PKR)
• Tax Rate — The applicable sales tax rate (18% for Pakistan FBR 2024-2025)

Explanation: The formula works backward from the total amount to find the original price before tax was added.

3. Importance of Reverse Tax Calculation

Details: Reverse tax calculation is essential for accounting, expense reporting, and financial analysis. It helps businesses and individuals understand the actual cost of goods/services before taxes were applied.

4. Using the Calculator

Tips: Enter the total amount paid in PKR and the tax rate (default is 18% for Pakistan FBR 2024-2025). The calculator will show both the pre-tax amount and the tax amount.

5. Frequently Asked Questions (FAQ)

Q1: What is the standard sales tax rate in Pakistan?
A: The standard Federal Board of Revenue (FBR) sales tax rate is 18% for 2024-2025.

Q2: Why would I need to calculate the pre-tax amount?
A: You might need it for accounting records, expense reports, or to understand the actual cost of goods/services before taxes.

Q3: Does this work for different tax rates?
A: Yes, you can enter any tax rate, though the default is set to 18% for Pakistan's standard rate.

Q4: How accurate is this calculation?
A: It's mathematically precise, assuming the tax was calculated as a simple percentage of the pre-tax amount.

Q5: Can I use this for GST calculations?
A: Yes, the same formula applies to any value-added tax system where tax is a percentage of the pre-tax amount.