Group tax needs to be created separately for both Sales and Purchases transactions. Please take utmost care while creating Group Tax because group tax is not editable and once created, you will not have the option to delete them. In order to create group tax, follow the steps below:

  1. Click Taxes on the left menu.
  2. In Tax Center, click on Add Tax.
  3. In the drawer that slides out from the right, select "Group rate".
  4. Enter the Group Tax Name in the Group name text box (eg. Excise Duty 12% + Cess).
  5. Select the First Tax Rate (if you are creating Group tax for purchase transaction, make sure you select the rates which are applicable for purchase only. Eg. Purchase ST 12%).
  6. Select the amount on which the Tax is applicable (Net Amount of the bill).
  7. Select the next level of Tax Rate from the drop down (eg. Purchase EC 2%). Ensure that you select the rates applicable to the type of transaction you are creating this group tax for.
  8. Select the amount on which the Tax is applicable (Net Amount of the bill or First Tax amount or the Sum of Net Amount and First Tax amount).
  9. If you want to add another level in the group, click on "Add tax rate" link and follow step 7 and 8.
  10. Once you have added all the necessary Taxes in the group, click Save.
  11. A new group rate will get created and you will be able to see this rate in your Invoice or Bill depending on for which type of transactions you created this group rate.

*Note: In the Applicable drop down for the first Tax, always select Net Amount. Next level tax onwards, whenever you select Tax Amount in the Applicable On drop down, it will be First Tax Amount. Eg. if you want to create a group tax to include Education Cess and Higher Education Cess for 4% Service Tax for purchase, you would select the following tax rates:

  • First Tax Rate: ST 4% (Purchases)
  • Applicable On: Net Amount
  • Second Tax Rate: Purchase EC 2%
  • Applicable On: Tax Amount
  • Third Tax Rate: Purchase HEC 1%
  • Applicable On: Tax Amount

If you want to group two tax, of which one is already a grouped tax (eg. VAT and Service Tax {12% ST + 2% EC + 1% HEC}), first create one single tax rate for the grouped tax, in this example create 12.36% tax rate under Service Tax agency and use this new tax rate while creating group rate for VAT and Service Tax.

 

 

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