We are happy to announce the support for stacked or compound tax feature in our invoicing service. Now it is very easy for you to specify your QST (Quebec Sales Tax) or PST (Provincial Sales Tax) or other similar compound taxes in the invoices.

Where and how to specify, that a particular tax is a compound tax?

You can specify this in the tax settings page while adding or modifying taxes. Make use of the “Apply On” field in the tax settings.

If the tax is a compound tax, do the following –

  • Select “Item Amount + Tax1” as the value for “Apply On” field. Refer the image below for details (here PST is a compound tax)
Compound Tax
  • Specify the tax as the second tax (Tax2) while associating it to an item (product/service). Refer the image below for details
Product Compound Tax

If the tax is not a compound tax then select “Item Amount” as the value for the “Apply On” field. Nothing specific needs to be done while associating the tax to an item.

Here is a example as to how it works:

In certain provinces you are required to charge two taxes, the best example is GST (Goods and Services Tax) and PST (Provincial Sales Tax).

GST is generally charged on the selling price before PST, whereas PST depending on the province may be charged either on the selling price or on the total of selling price plus GST. Now you can handle both these scenarios easily in Zoho Invoice.

Scenario1: PST is charged on the selling price + GST

Item/Service Price $100.00
GST @ 5% of $100 $5.00
Sub Total $105.00
PST @ 7% of $105 $7.35
Total $112.35

To achieve this, add both the taxes (PST & GST) in the tax settings, for the “Apply On” field select “Item Amount” for GST and “Item Amount + Tax1” for PST. Now associate them to the item (product/service) for which you want to charge the taxes. While associating the taxes to the item specify GST as Tax1 and PST as Tax2.

Scenario2: PST is charged on the selling price

Item/Service Price $100.00
GST @ 5% of $100 $5.00
PST @ 7% of $100 $7.00
Total $112.00

To achieve this, add both the taxes (PST & GST) in the tax settings, for the “Apply On” field select “Item Amount” for both these taxes. Now associate them to the item (product/service) as Tax1 & Tax2.

Note: While associating compound tax to an item (product/service) you will always have to associate it as the second tax (Tax2).

For further details on tax settings refer our help.

Hope you find this feature useful; feel free to share your comments.

Check into this feature by logging into Zoho Invoice now.