Tax Setup
Tax Setup on the Settings tab is where the tax components themselves are created and maintained — the rates, the statutory categories and the General Ledger accounts each one posts to. It is the same data as the Taxes list, reached from the settings side of the module.
Where to find it
Go to Taxes Module > Settings > Taxes. The Taxes tab shows the same components as a list; this is the setup route.
What to define
| Field | Description |
|---|---|
| Select Tax Type | The statutory category — GST, IGST, VAT — used to group the component in tax reports. |
| Description | A unique name, which appears when you build tax groups. |
| Default Rate | The percentage. Held with high precision so invoice totals are exact. |
| Sales GL Account | Output tax — the liability owed to the government. |
| Purchasing GL Account | Input tax — what you can reclaim. |
| Input/Output RCM GL Account | Reverse Charge Mechanism accounts, where the buyer carries the liability. |
Getting the accounts right
The two account fields are what make the ledger balance. Output tax is a liability because you are holding money for the government; input tax is an asset because the government owes it back to you. Pointing both at the same account nets them off and hides the real position.
Decide the account mapping before you create the first component. Changing it later moves only future postings — everything already recorded stays where it went, and reconciling the two takes a journal.
What happens next
A component defined here does nothing on its own. Bundle it into a tax group, assign that group to your customers and suppliers, and set item tax types on the products — only then does tax appear on a transaction.
Related pages
- Taxes — the same components as a list
- Tax Groups — bundling them
- GL Accounts — the accounts mapped here
- System and GL Setup — company-wide defaults