Taxes
Tax configuration helps you apply the correct tax rates to items, invoices, and purchase bills. Set up your tax rates once and use them across all transactions.
What Are Tax Configurations?
Tax configuration in Xnoll Inventory lets you define tax rates that apply to your sales and purchases. You can create tax rates as percentages, fixed amounts, or compound taxes. Once configured, they can be assigned to items and automatically applied when creating invoices, quotations, and purchase bills.
How to Add a Tax Rate
Tax Rate Fields
| Field | Description |
|---|---|
| Tax Name Required | A descriptive name for the tax (e.g., "GST", "VAT", "Sales Tax"). Shown on invoices and reports. |
| Rate % Required | The tax rate value. For percentage type, enter as a number (e.g., 18 for 18%). For fixed type, enter the amount per unit. |
| Type Required | Choose Percentage (tax calculated as % of item value) or Fixed (fixed amount per unit). |
| Is Compound Optional | Checkbox. When enabled, this tax is calculated on the subtotal including other taxes (compound tax). Leave unchecked for simple tax-on-tax exclusion. |
| Description Optional | Internal notes for your reference. Not shown on invoices or reports. |
Tax Rates List
The tax rates list shows all taxes you have configured. Use it to edit, disable, or view where each tax is used.
How Taxes Apply to Items, Invoices, and Bills
Taxes can be assigned at the item level or overridden at the transaction level. When you add an item to an invoice or purchase bill, the item's default tax is applied automatically. You can change the tax per line if needed.
- Items — Assign a default tax to each item. This tax is used when the item is added to quotations, sales orders, invoices, purchase orders, and purchase bills.
- Invoices — Each line item shows its tax. The invoice totals include subtotal, tax breakdown, and grand total.
- Purchase Bills — Taxes apply similarly to purchase bills. Each line can have its own tax.
How to Set Default Tax
You can set a default tax for your company in Settings. This tax is used when creating new items or when no tax is explicitly assigned. The default tax helps new items inherit the correct rate without manual assignment.
How to Assign Tax to an Item
When creating or editing an item, open the tax or pricing section. Select the tax from the dropdown. If no tax is selected, the company default or no tax is applied. You can change the tax per line when adding items to transactions.
Understanding Tax Calculations on Invoices
Tax is calculated per line item based on quantity, unit price, and the assigned tax rate. Here is an example with generic amounts:
- Item A: 2 units × 100.00 = 200.00 subtotal. With 10% tax: 20.00 tax. Line total: 220.00.
- Item B: 1 unit × 50.00 = 50.00 subtotal. With 5% tax: 2.50 tax. Line total: 52.50.
- Invoice totals: Subtotal 250.00, Total tax 22.50, Grand total 272.50.
For compound taxes, the tax is calculated on the subtotal including other applicable taxes. The exact order depends on your tax configuration.