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

Upmind supports and can configure global sales tax requirements, including:

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

Taxes in Upmind are customisable and managed using templates and tags, allowing different rules per product and client location. This guide explains how to set up and configure taxes for your brand, as well as how to debug any issues with the setup.

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Accessing tax settings

1. Log in to Upmind.
2. Go to Settings.
3. Select Tax Settings from the Ecommerce Settings.

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Enabling tax features

Switch the TAX Registered? ON if your business is tax registered, and then enter your tax number for official documentation. This enables tax options throughout your store. By default, the toggle is OFF, so you can switch it ON if applicable.

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Tax inclusion setting

You can decide if your product prices are tax inclusive (tax included) or tax exclusive (tax added). By default, the setting is off, so Upmind adds tax (if applicable) to the price. Toggle it ON to indicate prices include tax, and Upmind will deduct tax accordingly.

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How Upmind handles taxes

Upmind uses tax templates and tax tags to manage taxes efficiently.

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Tax templates

Tax templates are sets of tax rules assigned to products. Each product can have only one tax template, but a template can apply to many products. Templates allow you to apply different tax rules based on product type, location, or client type. Example: A web design firm might charge local tax on design work, but tax hosting based on the client’s location. Food and beverage businesses may charge higher tax rates on alcohol than on food. You can create tax templates by clicking Add Tax Template, naming it (visible only to you), and selecting the applicable business types (commonly Virtual Services). Then, assign tax tags to the template.

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Tax tags

Tax tags are individual tax rules within a template. They can be fixed fees or percentages and may include secondary rates. When applied, Upmind processes tax tags in order, applying those relevant to the invoice. Example: Two tax tags applied: When creating a tax tag, you:

1. Name the tag.
2. Choose the default fixed or percentage fee and enter the amount and currency.

3. Optionally add a secondary rate for specific business types, such as businesses rather than individuals. This is common in the EU under the reverse charge mechanism for applicable countries.

4. Set display options (show tax at invoice or item level).

5. Choose whether the tax applies to the subtotal only or the subtotal plus previous taxes.

6. Assign applicable locations (countries, regions, client types).

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Tax settings

Tax settings control how Upmind calculates and applies taxes across invoices and products. Business Type: You can pick the type that matches your operations from a range of options. Upmind uses this to apply correct tax rules and templates automatically. Automatic VAT Validation: Turn on to check VAT numbers automatically when clients enter or update company details. Upmind queries external services for validity in real time. VAT Synchronous Check on Company Update: Activate instant VAT checks during company info changes. This requires Automatic VAT Validation to be enabled and speeds up validation without delays. VAT Number Validation Interval: Set days between rechecks of VAT numbers on invoice creation, like 30 days. Upmind skips checks if within the interval to save time and API calls.

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Tax on invoices

When an invoice is generated, Upmind shows a tax summary and a breakdown of taxes charged.

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Applying taxes by location

Upmind determines applicable taxes based on the client’s address or, if none is provided, their IP geolocation at the country level. If a client adds an address, the tax rate is recalculated for greater accuracy. Since IP geolocation only identifies the country, regional tax rules require a client’s address to apply correctly; otherwise, no tax rate will display for specific regions. Example: Indian GST System India has three sales tax types:

• IGST: Charged on inter-state transactions.
• CGST: Charged on intra-state transactions by the central government.
• SGST: Charged on intra-state transactions by the state government.

So, a business in Maharashtra charges SGST for local clients and both IGST and CGST for clients in other states.

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Common scenarios

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The invoice has no tax applied

A frequent issue occurs when tax is configured after invoice creation. Why does this happen:

• Tax is calculated at the time the invoice is generated.
• If tax settings are not active at that moment, the invoice will not include tax.

What to do:

• Regenerate the invoice with updated tax settings. This option is only available for unpaid invoices. Upmind recalculates tax when the invoice is regenerated, so the corrected tax amount will reflect on the new version.
• For paid invoices where tax should have been applied before payment, regeneration is not an option. In this case, process a refund against the original invoice, then generate a new invoice with the correct tax calculation applied. This keeps your records accurate and the tax figures legally correct.