Understanding Taxes and how the Sree Jain Infotech Tax Engine works

As the definition goes, a tax is a financial levy or charge imposed by the local, state or federal government of the taxpayer. There are two types of tax:

  1. Direct Tax - which are paid directly to the government by the taxpayer such as Income Tax, Corporate Tax, etc..
     
  2. Indirect Tax - which is paid through one or more intermediaries to the government. Examples of Indirect Tax include Sales Tax, Value Added Tax (VAT), Service Tax, etc..

The Sree Jain Infotech Tax Engine module allows you to collect any Indirect Taxes from your Customers and Sub-Resellers, when you sell any product or service to them using our system. Click here to view a Flash Demo on the Sree Jain Infotech Tax Engine >>
 

Understanding how the Tax Engine works
 

1. The Tax Engine can handle only Variable taxes as a percentage of the Invoice Amount. Any Fixed amount Tax needs to be raised as a Miscellaneous Invoice separately.

2. Tax is stored against only Invoices.

3. A Tax Rule consists of

  • Name of the Tax (eg. Sales Tax, VAT, etc.)
  • Product Category for which the tax is applicable
  • Country and State combination to which the rule applies
  • Percentage of the Invoice amount for calculating the tax
  • Any information that you wish to display to your Sub-Resellers and Customers when an Invoice is generated under this tax rule
  • Start and End Date of this Tax Rule alongwith the applicable Time Zone
  • Exempted Sub-Reseller and Customer Ids

4. The system does not allow you to create conflicting tax rules and separate tax rules need to be created for each Product/Service that you are selling for each unique State and Country combination within a set timeframe. This means that if you are selling 2 products A and B, then you may create rules such as -

Product Category Percentage of Invoice Amount Name of Tax Country State Time Zone Begin Date End Date
A 10 Sales Tax Any Country Any State GMT 10-08-2006 10-10-2006
A 15 Service Tax Any Country Any State GMT 11-10-2006 10-08-2007
B 6.3 Sales Tax USA Arizona MST 10-08-2006 10-08-2007
B 5 VAT China Beijing Beijing 10-08-2006 10-08-2007

Let's analyze the above example,

  • For Product A two Tax Rules have been created which are applicable to all Countries. This is only possible since they do not have overlapping timeframes ie. the second tax rule is starting after the first tax rule has ended.
     
  • If more than 1 tax needs to be applied for a particular Product for a unique Country & State combination, then you would need to add all tax percentages and mention the same in a single Tax Rule under an appropriately named Tax, so that your Sub-Resellers and Customers can identify which tax they are paying.
     

5. If you modify an existing tax rule for a Product/Service, then the system deactivates the previous tax rule and creates a fresh one for the same, with the modifications submitted.

This implies that if say you modify the Percentage of Invoice Amount of an existing rule, it would not modify the same in the previously generated Invoices, and would only affect Invoices generated after this modification has completed. The same is applicable for any other Tax Rule parameter such as Invoice Footer.

 

  • 1 Users Found This Useful
Was this answer helpful?

Related Articles

Reseller Account Startup Guide

As a Reseller, you need to make the following settings within your Reseller Control Panel...

Video Tutorials

Below, you will find a list of video tutorials that will familiarize you with our system....

Creating a Demo Reseller Account

To understand and evaluate the interfaces and API we provide, you can use the Demo interface....

What is SuperSite?

SuperSite is a complete private-labeled Website for you and your Resellers. Here, your Customers...

What is PartnerSite?

PartnerSite is a complete private-labeled website to jumpstart your wholesale Business. In...

Powered by WHMCompleteSolution