What is Direct Taxes in Zoho Billing?

Estimated reading: 3 minutes 109 views

Introduction

Taxes are an integral part of running a business. The types of taxes applicable depend on your business location and industry regulations. Zoho Billing provides flexible tax configuration options, including country-specific tax rules, compound taxes, multiple rates, and tax groups, so your invoicing stays compliant.

This article walks you through the steps to configure and manage taxes in Zoho Billing.

Adding New Taxes

Set up your taxes based on your regional tax laws and requirements.

Steps to add a new tax:

Navigate to Settings > Taxes & Compliance > Taxes.
Click + New Tax.
Enter the Tax Name.
Specify the Rate in percentage (%).
(Optional) Enable the checkbox if this is a Compound Tax.
Click Save.

Insight:
A Compound Tax is used when a secondary tax (like provincial) is applied on top of another tax (like federal). For example, the provincial tax may be calculated on the total amount including federal tax.

Editing Taxes

Modify existing tax rates and settings as needed.

To edit an existing tax:

Go to Settings > Taxes & Compliance > Taxes.
Click on the tax you want to edit.
Make your changes.
Click Save.

If the tax is already used in past transactions, Zoho Billing will prompt you to choose whether to update those transactions with the new rate.

Deleting Taxes

Remove obsolete or incorrect taxes from your settings.

Steps to delete a tax:

Go to Settings > Taxes & Compliance > Taxes.
Hover over the tax row you wish to delete.
Click the trash bin icon.
Confirm deletion in the pop-up dialog.

Adding a New Tax Group

Tax groups help you apply multiple taxes together on invoices and other transactions.

Use Case:

You need to apply both a standard tax and a newly introduced cess on every invoice. You can combine both in a tax group for quick application.

Steps to create a tax group:

Navigate to Settings > Taxes & Compliance > Taxes > Tax Rates.
Click + New Tax Group.
Enter a Group Name.
Select the individual taxes to include.
Click Save.

The total rate will be the sum of all selected tax rates.

Create Taxes in Bulk

Easily add multiple tax rates at once.

Steps to create taxes in bulk:

Go to Settings > Taxes & Compliance > Taxes > Tax Rates.
Click the dropdown next to + New Tax, then select Create Taxes in Bulk.
Enter each Tax Name and Rate (%).
Click + Add Tax to insert more rows.
Enable These taxes are compound taxes if needed.
Select a common Tracking Preference for all.
Click Save.

Zoho Billing will now create all specified tax entries in one go.