Customer Tax Information

Customer Tax Information

Accurate tax information for customers is essential for proper tax calculations, compliance, and generating correct invoices. This guide explains how to configure customer tax settings in EquiBillBook.

Why Tax Information Matters

Customer tax information determines:

• How taxes are calculated on invoices
• Which tax rates apply to transactions
• Tax compliance and reporting requirements
• Place of supply for tax calculations (important for GST/VAT)
• Tax exemption eligibility

Tax Preference

Tax preference indicates the customer's tax status:

Taxable

• Customer is subject to taxes
• Taxes will be calculated and applied to invoices
• Most common option for regular customers

Tax Exempt

• Customer is exempt from certain taxes
• May require tax exemption certificate or documentation
• Used for tax-exempt organizations, exports, etc.

Non-Taxable

• Customer transactions are not subject to taxes
• No taxes calculated for this customer
• Use based on business rules and regulations

GST Treatment (For Indian Businesses)

If you're operating in India, GST treatment specifies how GST applies:

• Regular: Regular GST-paying customer
• Composition: Composition scheme customer
• Unregistered: Unregistered customer (B2C)
• Consumer: End consumer
• Overseas: Export customer
• SEZ: Special Economic Zone customer
• Deemed Export: Deemed export transactions

Place of Supply

Place of supply determines which tax jurisdiction applies (important for GST/VAT):

• Intra-state: Customer in same state (CGST + SGST)
• Inter-state: Customer in different state (IGST)
• Select the state/region where supply is considered to take place
• Affects tax calculation and compliance

Tax Exemption

If the customer qualifies for tax exemption:

• Select the applicable Tax Exemption from the list
• Tax exemptions must be set up in Tax Settings first
• Used for specific exemptions (e.g., certain goods, services, or customer types)

GST Registration Information

For registered customers (in applicable countries):

• GST Number: Enter the customer's GST registration number
• PAN Number: Enter the customer's PAN (Permanent Account Number)
• This information appears on invoices and is required for compliance
• System may validate GST number format

Business Registration Details

For business customers, you can also add:

• Business Registration Type: Type of business registration
• Business Registration Number: Registration number
• Business Legal Name: Legal entity name
• Business Trade Name: Trading name (if different)

Setting Up Customer Tax Information

To configure tax information for a customer:

While Creating a Customer

1. Go to Customers → Add Customer
2. Scroll to the Tax Information section
3. Select Tax Preference (Taxable, Exempt, or Non-Taxable)
4. If applicable, select GST Treatment
5. Select Place of Supply
6. If applicable, select Tax Exemption
7. Enter GST Number and PAN Number if applicable
8. Fill in business registration details if needed
9. Save the customer

Editing Existing Customers

1. Go to Customers → Customer List
2. Find and edit the customer
3. Navigate to the Tax Information section
4. Update the tax-related fields
5. Save the changes

How Tax Information Affects Invoices

Customer tax information directly impacts invoice calculations:

• Tax Calculation: Taxes are calculated based on customer's tax preference and place of supply
• Tax Rates: Appropriate tax rates (CGST/SGST/IGST) are applied based on place of supply
• Tax Exemptions: Exempted taxes are not applied if tax exemption is selected
• Invoice Display: Customer GST number and tax details appear on invoices
• Compliance: Ensures invoices meet tax compliance requirements

Multi-state Scenarios

For businesses operating in multiple states:

• Place of supply determines whether intra-state (CGST+SGST) or inter-state (IGST) applies
• Customer's state and your business state determine the tax type
• System automatically calculates the correct tax based on place of supply

Tax Compliance

Proper tax information ensures:

• Correct Tax Calculation: Right taxes are calculated and applied
• Invoice Compliance: Invoices meet regulatory requirements
• Tax Reporting: Accurate tax reports can be generated
• Audit Readiness: Proper documentation for tax audits

Best Practices

• Complete Information: Fill in all applicable tax fields for business customers
• Verify GST Numbers: Verify GST registration numbers for accuracy
• Update Regularly: Keep tax information updated, especially if customer status changes
• Document Exemptions: Maintain documentation for tax-exempt customers
• Consult Tax Advisor: Consult with a tax advisor for complex tax scenarios
• Place of Supply Accuracy: Ensure place of supply is correctly set for accurate tax calculation

Troubleshooting

Tax Not Calculating: Check that tax preference is set to "Taxable", verify place of supply is selected, and ensure tax rates are configured in tax settings.

Wrong Tax Applied: Verify place of supply is correct (intra-state vs. inter-state), check GST treatment settings, and ensure tax rates are properly configured.

Tax Exemption Not Working: Verify tax exemption is set up in tax settings, ensure exemption is assigned to customer, and check that exemption applies to the items being invoiced.

Related Topics

• Creating Customers
• Customer Details
• Tax Settings
• Creating Sales Invoices
• Tax Reports