To create custom tax agency, follow the steps below:
- Go to Taxes.
- In Tax Centre, select Add tax.
- A panel slides out from the right. Here, select Custom tax.
- Enter the Tax name (For example. Excise Duty).
- Enter the Description.
- Tax agency name gets populated automatically based on the Tax name you've entered. You can change this if you wish.
- Enter the Business ID no.
- Select Start of current tax period from the dropdown.
- Select Filing frequency for this agency from the dropdown.
- Select Reporting method. Note: Usually it'll be Accrual. If in doubt, please consult with your accountant.
- Select the type of transactions this tax is applied to. Note: Usually, it'll be for both Sales and Purchase transactions.
- Enter the Sales rate or the Purchase rate depending upon the type of transaction selected.
- If the tax applied on purchases is reclaimable, select the box Purchase tax is reclaimable.
- Select Save.
In the Tax Centre, you can now see the new Tax agency you have just created. If some additional cess is applied for this agency (For example. Education Cess, Higher Education Cess), create custom tax rates for those cess by following the steps in Create Custom Tax Rate, then create group tax.