How to Set Sales Taxes (e.g. VAT, GST)

Manage TAX, GST and business taxes

Upmind fully supports sales taxes in various guises and it can be configured for your needs wherever you are based. Typically this could be used for:

  • UK VAT
  • EU VAT
  • US Sales taxes (state and federal)
  • Indian GST
  • Service charges
  • Card processing fees

Upmind's tax implementation is extremely customisable. You can set different tax templates per product, and within a tax template apply unlimited numbers of taxes which can vary based on your client's location.

In this guide we will show you how to set it up and configure taxes on your brand, and explain how you can debug the setup.

Opening tax settings dashboard

  1. Log in to Upmind.
  2. Click Settings.
  3. On the next page, click Tax settings.

Enabling Taxes

By default, the TAX Registered? toggle is in the OFF position. If you are TAX registered, we suggest that you toggle the switch ON and then enter your TAX number.

This will enable tax functionality throughout Upmind.

Tax inclusion

Tax inclusion defines whether the prices you enter are excluding or including any taxes.

The default setting is disabled. That means Upmind automatically adds tax (if any taxes apply) to the purchase price.

Click the toggle to the ON position to enable this control. When enabled, Upmind assumes the product price includes tax. In this case, Upmind deducts tax (if any taxes apply) from the purchase price.

Enable or disable tax includedEnable or disable tax included

Enable or disable tax included

How Upmind handles taxes

We use the terms tax templates and tax tags

  • Tax templates are sets of tax rules which are mapped to a product. When you create a product you assign a tax template. A product can only have one tax template. One tax template can be assigned to many products (or all your products)
  • Tax tags are taxes that get applied to invoices of a specific product with that tax template applied. You assign one or more tax tags to each template.
  • When an invoice is generated, if tax applies you will see a summary of the tax that is charged and also a breakdown of the taxes that make up the tax total.

Tax Templates

Templates are sets of tax rules (called tags) that you can apply to products and services you sell.

In most businesses you will have just one tax template. However, in some jurisdictions there are different rates of tax for different products. For example:

  • A web design firm selling web hosting may charge local tax for their web design work, and tax based on the client location for the hosting.
  • You may want to charge a % processing fee for some product types
  • In food and beverage, alcohol is often charged at a higher rate than food.

Within each tax template you can assign sets of tax rules depending on location, client type and more.

When creating or managing a product, you can choose which tax template you want to apply to a product. That means you could apply different sets of taxes to different products and services you sell.

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System defaults

You can optionally import our system default tax templates which provide most common tax options.

To create a tax template click Add tax template

When creating a tax template you can give it a name (this is just visible to you) and then choose the business types you want to apply it to. This will commonly be Virtual Services

Now you can assign tags to the template.

Adding a Tax Tag

Tax tags are the constituent tax tags that you want to apply to a tax template. Upmind goes through all the tax tags added to a template in order and applies any that apply. For example, here is an example of two tax tags applied:

  • Give the tax tag a name
  • Choose whether you want this to be a fixed fee or a percentage and enter the amount. If you enter an amount you need to choose the currency that is added.

  • You can add an optional Secondary rate for businesses (Rather than individuals). This is common in the EU under the reverse charge mechanism. In that case, in countries where this applies you would want something like the following:

  • You can define display options (whether you want to show the tax on the invoice level or the item level)
  • Choose whether you want to apply the tax to the subtotal of the invoice, or if you want to apply it to the subtotal plus all previous taxes. This is why the order of tax templates is important.
  • Now you choose the locations which you want this tax to apply to. You can add as many locations as you like.
  • Here is an example of the European countries with a 21% VAT rate, and the reverse charge mechanism applying.

Example Configurations

You should always talk to your accountant for any tax advice. We build software based on our understand and advice on tax rules, but we aren't here to replace your accountant and no advice we give should be taken unchecked.

India

If you are in India there are three types of sales tax

  • IGST - Integrated Goods and Service Tax. Charged on inter-state goods and service transactions.
  • CGST - Central Goods and Service Tax. Charged on intra-state goods and service transactions by the central government.
  • SGST - Stage Goods and Service Tax. Charged on intra-state goods and service transactions by the state.

Therefore if you are based in Maharastra, you would charge your clients in Maharastra SGST, and any clients in other Indian states both IGST and CGST

Automatically determining location

If your client has not added an address then we use their IP location to determine the tax rate. If your client adds an address then the tax rate will be recalculated.

We can only geolocate an IP address to the country level. That means if you have added tax rules for regions but not the country as a whole, then a tax rate will not display until an address is added.