## Zoho Invoice — Product, features, payments, integrations, solutions, and help Index

Access the complete documentation index at:
https://www.zoho.com/om/invoice/llms.txt

Use this file to discover all available documentation pages before proceeding.

[Back to Settings Overview](/invoice/help/settings/index.html)

# Taxes

Your business’ financials are affected by regulatory taxes and each organization has different country specific taxes to adhere to. You may have added Taxes in the Quick Setup section. You can edit or add further Taxes through the Settings section.

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## Enabling Tax for your organization

Before adding taxes, you’ll have to enable them for your organization. To do that, follow the instructions below:

*   Click on the **Gear** icon present on the top-right corner of the page and select **Taxes**.
*   Click on the **Enable Tax** button to enable tax for your organization.

![Enable Tax](/ca/invoice/help/images/settings/enable-tax.png)

You can also enable taxes for your organization as early as while creating it. In the organization creation page, just check the box that says _**Is your business registered for tax?**_

![Enable Tax - organization creation](/ca/invoice/help/images/settings/tax-button-org-profile.png)

**Insight:** If you have enabled a Recurring invoice profile or connected your account to Stripe or done both, you will be prompted to enter a default Exemption Reason and Tax Authority.

![Recurring profile exemption](/ca/invoice/help/images/settings/exemption-authority.png)

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## Adding New Taxes

To create or add a new Tax, follow steps as below:

*   Click on the **Settings** icon found on the top right hand side corner of the screen and click on **Taxes**.
*   To add a new tax, click on **\+ New Tax**.
*   Provide a Tax Name.
*   Enter the relevant Rate in %.
*   Specify the name of the **Tax Authority**.
*   Click **Save**.

![New tax](/ca/invoice/help/images/settings/new-tax.png)

**Note:**

**What is a Compound Tax?** In some countries you might have to collect more than one tax from your customers. It is for you to pay to your local province and another to the federal authority. In certain cases, the provincial tax is applied on the total that includes the item or invoice amount as well as the federal tax amount. Such taxes are called as Compound Taxes.

**What if I don’t check the “This is a value added tax” box?**

It will be considered as a **Non-Value Added Tax**. In some provinces, tax on purchases cannot be reclaimed. In this case, the tax cannot be treated as a liability but an expense.

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## Editing Taxes

To edit an existing tax, please follow the steps below:

*   Click on the **Gear** icon found on the top right hand side corner of the screen and click on **Taxes** from the drop-down.
*   In the Edit Tax screen, edit the desired fields such as Tax Name, Rate and select if it is a compound tax.
*   Click **Save** for the changes to take effect.

![Edit tax](/invoice/help/images/settings/edit-tax.png)

*   If this tax has already been applied in some transactions, you will be asked to confirm if you wish to update the new tax rate in those transactions as well.

![Update Tax Rate](/invoice/help/images/settings/update-tax.png)

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## Deleting Taxes

To delete an existing tax follow steps as below:

*   Click on the **Settings** icon found on the top right hand side corner of the screen and click on **More Settings**. Click on **Taxes**.
*   Scroll over the desired tax row and click on the trash bin icon which appears. Confirmation pop-up screen will double check your intention. Click to OK to Delete or **Cancel** to skip.

![Delete tax](/ca/invoice/help/images/settings/deleting-tax.png)

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## Adding a New Tax Group

To create a Tax Group, follow steps as below:

*   Click on the **Settings** icon found on the top right hand side corner of the screen and click on **More Settings**. Click on **Taxes**.
*   Click on the **\+ New Tax** drop-down and select **New Tax Group**.
*   Provide a Tax Group Name.
*   Select the taxes to be clubbed together by clicking on the check box, next to the desired taxes.
*   Click **Save** to add new tax group.

![Add Tax group](/ca/invoice/help/images/settings/adding-tax-group.png)

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## Adding a New Tax Exemption

There might be situations where you are exempt from paying taxes because of the item or the customer to whom you are selling the product. For example, the sale of medicines is exempt from sales tax in New Jersey.

To create a Tax Exemption, follow the steps below:

*   Click on the **Settings** icon found on the top right hand side corner of the screen and click on **More Settings**. Then click on **Tax Exemptions** under **Taxes**.
*   Click on the **\+ New Tax Exemption** button.
*   Provide a **Exemption Reason** and enter a short description if necessary.
*   Select the basis of the tax exemption by choosing either **Customer** or **Item** under **Type**.
*   Click **Save** to add the new tax exemption.

![Add Tax Exemption](/ca/invoice/help/images/settings/adding-tax-exemption.png)

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## Adding a New Tax Agency

To create a Tax Agency, follow the steps below:

*   Click on the **Settings** icon found on the top right hand side corner of the screen and click on **More Settings**. Then click on **Tax Agency** under **Taxes**.
*   Click on the **\+ New Tax Agency** button.
*   Enter the name of the **Tax Agency** and provide a short description if necessary.
*   Also mention your organization’s Registration Number provided by the tax agency if required. This field, if mentioned, will be included in all your invoices by default.
*   Click **Save** to add the new tax agency.

![Add Tax Exemption](/ca/invoice/help/images/settings/adding-tax-authority.png)

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## Other Actions

You can mark any one of the taxes added as the default tax. Default Tax can be useful for the following scenarios.

*   When customers are imported into Zoho invoice, their tax preference is not set. When these customers are involved in transactions, the Default Tax will be applied in those transactions.
*   The tax preference will also not be set for customers who were created before taxes were enabled. Here again, the Default Tax will be used in transactions where these customers are involved.

To mark a tax as the default tax, hover the cursor next to a particular tax and click on the **mark as default** button.

You can also delete a tax by clicking on the **Trash** icon.

![Tax Other Actions](/ca/invoice/help/images/settings/tax-other-actions.png)