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Tax is a fee charged (or levied) by a government on a product, service, income, or activity.
Vtiger CRM gives you the flexibility to manage all your tax rates in a hassle-free way through the Tax Management feature.
By using Tax Management, you can:
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This section will explain how to navigate through the CRM and reach the Tax Management Settings page. Let us face it; Vtiger CRM has a plethora of modules and their respective settings.
Follow these steps to reach the Tax Management page:
The Tax Management Settings page opens.
On this page, you will see three tabs - Taxes, Charges, and Regions. Coming up in this article is a detailed explanation of every button, field, and section in these tabs.
So without any further ado, let us jump in and understand how to set up taxes in Vtiger CRM.
There are a few terms in tax management that you must know before starting adding a tax and using it in other modules.
Now is the time you must channelize your energy and concentrate on the next few pages.
So in this section, you will be learning about,
Where do taxes appear?
The tax value you specify is visible in the Item Details block of any Inventory record. After you define the tax rates in the CRM, they will be available for selection in Quotes, Sales Orders, Invoices, and Purchase Orders.
Vtiger CRM supports the following two tax modes:
You can set your tax mode to Group in a quote, invoice, sales order, or purchase order by going to the Item Details block > Configure > Tax Mode in the Detail View of the record.
Why do we use group taxes?
When you have hundreds of line items, it’s a hassle to define taxes on each of them. In this case, you can apply a group tax and save time.
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This feature enables you to create National and International taxes.
There are two types of taxes:
In this section, you will understand the different ways in which taxes are calculated. You will also learn the various combinations of tax types and tax combinations.
There are three ways in which taxes are calculated: Simple, Compound, and Deducted.
It is applied to the Items Total after the discount.
It is a tax that is calculated using one or more simple taxes.
For example, assume that the product cost is $200 per unit. If compound tax is computed as 2% of the product’s tax value, then the product’s price after taxes is $242.76. Compound tax is calculated as 4.5% VAT+12.5% Service Tax+2% Sales Tax.
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In the below example, Tax Value 5% can be changed depending on the region.
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Deducted Tax is useful in situations where you have to withhold the tax before paying the vendor. Deducted Taxes are computed on Items Total and are deducted from the Total.
For example, in Spain, IRPF tax is applied to self-employed individuals. Clients deduct the Tax before paying these individuals. The deducted tax value specified in the settings can be changed individually in the record.
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Now that you know about different tax components let us learn about adding a tax. You can add new taxes and use them when creating a quote, invoice, sales order, or purchase order.
Follow these steps to add a new tax:
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Sharing Access for the Tax Type Field
As an admin, you canA Charge is an additional fee applied to the Items Total on Invoices, Quotes, and Sales Orders, such as Shipping and Handling charges, or delivery charges. Charges are not applied individually on Products or Services.
So in this section, you will be learning about,
Where do Charges appear?
The charge value you specify is added directly to the Charges field in the Inventory records. This value is added to the Items Total amount after the overall discount is added.
Vtiger CRM offers two types of charges:
Charges can be applied to specific regions also. Here is the logic behind it.
First, you must add a new tax for charge and specify the regions in it. Next, you must add a new charge, make it taxable, and add the tax that you created previously. So now, whenever the charge you created is applied on an inventory record, the taxes will be applied based on the region.
For example, let’s say Freight tax has a default tax value of 2%, and a specific region, say Bangalore, has a tax value of 2.5%. So if the Freight tax is added to a Charge, then that Charge for the Bangalore region will have a tax value of 2.5%.
The Charge Value in the Add New Charge window is the default value in the Items Total in any record. You can change the charge value later.
For example, in Shipping and Handling Charge, you may have added the Charge Value of a Product as 100. In the invoice, you can change the Charge Value to 150 for that Product. All you have to do is click on the Charges field and enter the charge value of your choice.
When you add a new charge, you will have a specific value assigned for that charge above all the taxes included within it.
Follow these steps to add a new tax:
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Adding a new tax for charge helps the user add new taxes that could be used in charges. The tax can be either a Simple Tax or a Compound Tax.
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The Is Taxable field within the Add new charge window has to be enabled to show taxes on charges. The Select Tax field in the Add new charge window indicates that the charge is applicable only on taxes selected from the list of taxes for charges.
A charge can have any number of taxes included within it. You can even change the tax value in the Inventory record accordingly. Refer to the below screenshot to change the tax value within that specific charge of that particular invoice. All you have to do is click on the Taxes on Charges field and change the values.
A Charge can be created such that:
It is the tax applied to specific regions. The region can be a particular location, a state, or a country. Tax regions will appear while creating variable taxes. You can select tax regions while creating Quotes, Invoices, Sales Order, and Purchase Orders.
You have the choice of deleting a tax region, but deleting a region will affect all inventory taxes within the existing regions.
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Adding a tax region is very simple in Vtiger CRM. All you have to do is specify the region name.
Follow these steps to add a tax region:
Your tax region is saved.
Consider the following three cases of calculating the taxes based on the tax region. You can select the region while creating or editing a simple inventory record.
Case 1: When the tax region is specified in individual tax mode
The taxes, charge, and charge taxes values specified for the region will be appearing in the calculation block. In the above screenshot, you can see the tax region and tax mode highlighted in red, specifying that the tax and discounts have been applied to every individual line item in the tax region, London.
Case 2: When the tax region is specified in group tax mode
The taxes, charge, and charge taxes values specified for the region will be appearing in the calculation block. In the above screenshot, you can see that the tax mode specified is Group for the region, London. Hence, no tax or discount is applied to individual line items. But if you glance down, there is a Tax field whose value is applied for all the line items, i.e., to the Pre Tax Total field.
Case 3: When the tax region is not specified
When a tax region is not specified, the default values of taxes, charges, and charge taxes will appear in the calculation block. You can see that the default values are applied in the above screenshot because the Tax Region is not specified. Also, the Group Tax is added to the Pre Tax Total amount.
Given a choice, you can set the default tax values and the values based on the region’s record level in the Products and Services module.
To change the tax values in the Products and the Services modules, you have to enable them on the Tax Calculation Settings page. Then you will be able to change the value of a tax for a specific region.
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Print templates are enhanced with Merge Fields having Tax Region, Deducted Tax, etc. related to Taxes. You can find these in the Merge Fields window under the Record Fields drop-down.
To know more about Print Templates, click here.
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