To calculate Gross Amount from Net Amount:
\[ \text{Gross Amount} = \text{Net Amount} \times (1 + \text{Tax Rate}) \]
To calculate Net Amount from Gross Amount:
\[ \text{Net Amount} = \frac{\text{Gross Amount}}{1 + \text{Tax Rate}} \]
Net amount is the value before adding tax (for VAT or sales tax) or after deducting tax (for income tax). Gross amount includes the tax.
For example, if you sell a product for $40 and the VAT is 25%, the gross price would be $40 + (25% × $40) = $50. If your gross pay is $50 and the income tax is 20%, your net income would be $50 - 20% = $40.
Example 1: Calculating Gross Amount from Net Amount:
Gross Amount:
\[ \text{Gross Amount} = $40 \times (1 + 0.25) = $40 \times 1.25 = $50 \]
Example 2: Calculating Net Amount from Gross Amount:
Net Amount:
\[ \text{Net Amount} = \frac{$50}{1 + 0.20} = \frac{$50}{1.20} = $41.67 \]