Taxes

The Taxes setting is the foundation for all tax-related math in the system. It is where you define individual tax components like SGST, CGST, or VAT before they are grouped and applied to transactions. Access this page via Taxes Module -> Taxes Tab.

Taxes Inquiry List
The main table provides a quick look at how each tax is mapped to your accounts:
  • Description: The name used to identify the tax (e.g., Output CGST 9%).
  • Default Rate (%): The percentage value used for calculations.
  • Sales GL Account: The account where tax collected from sales is stored (Liability).
  • Purchasing GL Account: The account where tax paid on purchases is tracked for credit (Asset).
  • Input/Output RCM GL Account: Specialized accounts used for Reverse Charge Mechanism where the buyer handles the tax liability.
  • Tax Type: The category (e.g., GST, IGST) used to group these entries in statutory tax reports.

Adding or Updating a Tax
When creating a new tax or editing an existing one, the following details are required to ensure the accounting is correct:
  • Select Tax Type: Choose the appropriate statutory category from the dropdown menu.
  • Description: Enter a unique name. This name will appear in dropdowns when building Tax Groups.
  • Default Rate: Enter the percentage. Note: The system uses high-precision math for these rates to ensure final invoice totals are accurate.
  • Sales GL Account: Select the General Ledger account for "Output" tax. This is where the money you owe the government is recorded.
  • Purchasing GL Account: Select the General Ledger account for "Input" tax. This tracks the tax you can claim back.
  • RCM Accounts: If this tax involves Reverse Charge, specify the Input and Output RCM accounts to track the shifting liability.

Management Tools
  • Add New: Click this to open a blank form for a new tax component.
  • Edit (Pencil Icon): Use this to update a rate or change a GL account mapping.
  • Delete (Trash Icon): You can only delete a tax if it has not been used in any transactions or linked to a Tax Group.
  • Show Inactive: Check this box to see taxes that were used in the past but are currently hidden.

Important Note
Individual taxes do not appear on invoices by themselves. You must first create these tax components here, and then go to the Tax Groups tab to bundle them together (for example, combining CGST 9% and SGST 9% into a "GST 18%" group). This ensures that every entry in your General Ledger is perfectly balanced.

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