Skip to main content

Commission and Taxation Examples

Commission Examples​

Example 1​

An agent earns 1% commission on Rs. 18,000. Calculate Commission amount, and Net Income.

  • SP = Rs. 18,000

  • Rate = 1%

  • Commission=(1100×18000=Rs.180)Commission = ( \dfrac{1}{100}\times 18000 = Rs. 180 )

  • Net Income = Rs. 18,000 − Rs. 180 = Rs. 17,820

Example 2​

A staff earns Rs. 12,000 monthly salary and 1% commission on sales above Rs. 6,00,000.

Monthly sales = Rs. 10,00,000. Calculate the total salary

  • Commission-able amount = Rs. 4,00,000

  • Commission=(1×400000100=Rs.4,000)Commission = ( \dfrac{1 \times 400000}{100} = Rs. 4,000 )

  • Total Salary = Rs. 12,000 + Rs. 4,000 = Rs. 16,000

Q1. Staff earns Rs. 21,000 total income. Salary = Rs. 11,000

Sales = Rs. 5,00,000. Commission Rate = ?.

Reveal solution

  • Commission = Rs. 21,000 − Rs. 11,000 = Rs. 10,000

  • Rate=(10,0005,00,000×100%=2%)Rate = ( \dfrac{10,000}{5,00,000} \times 100\% = 2\% )

So, the commission rate is 2%.

Example 3: Tiered Commission​

Total sales = Rs. 25,00,000 Commission rates:

  • 0.5% on first Rs. 10,00,000

  • 1% on next Rs. 5,00,000

  • 2% on remaining Rs. 10,00,000

    Total Commission = ?, Net Income = ?, Overall commission % = ?

Formula:Commission=(Rate/100)×AmountFormula: Commission = (Rate/100) × Amount

  1. 0.5% on first Rs. 10,00,000
  • Commission1 = (0.5/100) × 10,00,000 = 0.005 × 10,00,000 = Rs. 5,000

  1. 1% on next Rs. 5,00,000

    • Commission2 = (1/100) × 5,00,000 = 0.01 × 5,00,000 = Rs. 5,000

  2. 2% on remaining Rs. 10,00,000

    • Remaining = Total − (10,00,000 + 5,00,000) = 10,00,000

    • Commission3 = (2/100) × 10,00,000 = 0.02 × 10,00,000 = Rs. 20,000

TotalCommission=Commission1+Commission2+Commission3Total Commission = Commission1 + Commission2 + Commission3

= 5,000 + 5,000 + 20,000

= Rs. 30,000

NetIncome(seller)=TotalSales−TotalCommissionNet Income (seller) = Total Sales − Total Commission

= 25,00,000 − 30,000

= Rs. 24,70,000

Overall commission percent=(TotalCommission/TotalSales)×100 \text{Overall commission percent} = (Total Commission / Total Sales) × 100

= (30,000 / 25,00,000) × 100

= 1.2%

Taxation Examples​

Example 1​

Marked Price = Rs. 12,000

Discount = 15% → Rs. 1,800

Price after discount = Rs. 10,200

VAT=13%ofRs.10,200\text{VAT} = 13\% of Rs. 10,200

→ (13100×10200=Rs.1,326)( \dfrac{13}{100} \times 10200 = Rs. 1,326 )

Example 2​

600 students, monthly fee = Rs. 1,200

Tax paid by school = ?

Annualfee=Rs.1,200×12×600=Rs.86,40,000Annual fee = Rs. 1,200 × 12 × 600 = Rs. 86,40,000

Tax=1%ofRs.86,40,000→Rs.86,400Tax = 1\% of Rs. 86,40,000 → Rs. 86,400