Taxes are compulsory contributions to the state/country revenue.

One of the primary motivators for compulsory use of accounting tools is the calculation of taxes. OneHash CRM allows you to make configurable tax templates that you can apply to your sales or purchase transactions.

1. Tax Accounts

For Tax Accounts that you want to use in the tax templates, go to:

Home > Accounting > Chart of Accounts

Select an account and click on edit. Select the 'Account Type' as 'Tax' for the account.

2. Sales Taxes and Charges Template

Sales Taxes and Charges Template fetched taxes for your sales transactions like Sales Order and Sales Invoice.

How to add Sales Taxes and Charges Template?

Go to the Sales Taxes and Charges Template list, click on New.
Enter a title name for the Tax.
Under type, set on what the tax will be calculated and the tax rate. There are five options under type for which tax will be calculated.
Actual: You can directly enter the amount for the expense.
On Net Total: On the net total of all the items.
On Previous Row Amount: This is for compounding the charges. For example, cess charges over the amount to which tax was already applied in the previous row.
On Previous Row Total: Same as above but applied on the total bill and not just the amount of an item.
On Item Quantity: Tax will be calculated as Tax Rate multiplied by Item Quantity. For example, if Tax Rate is 2% and number of Items is 1, then Tax Rate will be 4, if number of Items are 5, Tax Rate will be 10, and so on.
Select an account head which has pre set tax rates or create your own.
Selecting default will apply this template by default for new Sales transactions.
Save. Sales taxes



3. Purchase Taxes and Charges Template

Purchase Taxes and Charges Template fetched taxes for your sales transactions like Purchase Order and Purchase Invoice.

How to add Purchase Taxes and Charges Template

Click on New.
Enter a title name for the Tax.
Under type, set on what the tax will be calculated and the tax rate. There are five options under type for which tax will be calculated.
Actual: On the actual amount of each item.
On Net Total: On the grand total of all the items.
On Previous Row Amount: This is for compounding the charges. For example, cess charges over the amount to which tax was already applied in the previous row.
On Previous Row Total: Same as above but applied on the total bill and not just the amount of an item.
Select an account head which has pre set tax rates or create your own.
Selecting default will apply this template by default for new Purchase transactions.
Save.

4. Item Tax Template

The tax set in Item Tax Template applies specifically to an Item or an Item Group. It is given preference over the Sales/Purchase Tax Template.

Prerequisites

Before creating and using an Item Tax Template, it is advised to create the following first:
- Item
- Enable 'Automatically add Taxes and Charges from Item Tax Template' in Account Settings.

How to create an Item Tax Template?

Go to the Item Tax Template list and click on New.
Enter a title for the Item Tax Template.
Select an account and set the overriding rate. Add more rows if required.
Save.
Now the Item Tax Template is ready to be assigned to an Item. To do this, go to Item, Item Tax section and select an Item Tax Template:

Some points to note

- If you set the Tax Category as empty, the default Item Tax Template will be applied to Items in transactions.

- You can apply different Item Tax Templates for different Tax Categories.

- For an Item Tax Template to override taxes, there must be a row in the Taxes and Charges table with the same tax Account Head with a standard tax rate.

- If you wish to apply taxes only on the Items with an Item Tax Template then you can set the standard tax rate as 0.

5. Tax Category

Tax category helps in automatically applying sales/purchase tax templates in your transactions based on the customer/supplier chosen.

Prerequisites

Before creating and using a Tax Category, it is advised to create the following first:

- Tax Rule

How does a Tax Category work?

- Go to the Tax Category list, click on New and enter a name.

- This Tax Category can be assigned to a Customer, so when that Customer is selected, the Tax Category will be fetched. This also applies in case of a Supplier.
- This will fetch the Sales Tax Template linked to the Tax Rule. Hence, the rows in the Tax table will be automatically filled.
- Tax Category can be used to group Customers to whom same tax will be applied. For example, Government, NGO, commercial, etc.



Assigning Tax Category

Tax Category is automatically determined in a transaction by either the Party Address or Party Master (Customer/Supplier). You can assign Tax Category based on:

Customer
Supplier
Address Billing or Shipping. You can select whether Billing Address or Shipping Address gets preference by changing the 'Determine Address Tax Category From' option in Accounts Settings. Tax Category is determined from Party Address first. If the Address is not assigned any Tax Category, then the Party's Tax Category is used.
Item
You can also manually select the Tax Category in a transaction.

What effect does the Tax Category have in a transaction?

Specific Item Tax Templates for that Tax Category are automatically set for items.
You can create Tax Rules (A Tax Rule automatically applies taxes to transactions based on preset rules) to automatically set a specific Sales / Purchase Taxes and Charges Template based on different Tax Categories in transactions.
Was this article helpful?
Cancel
Thank you!