Zoho Inventory


The Sales Tax module is exclusive to the USA. This feature will be available when you select U.S.A. as your country during quick setup of an organization. Below are a list of operations you can perform with sales tax.

Guide Layout:


Name Description
Tax Name It simply refers to the name you’d like to assign to a particular tax. For example, Austin can be the name assigned to the sales tax for the city of Austin.
Tax Authority It refers to the organization in charge of collecting taxes in a specified region. For example, the Travis County Tax Office is the tax authority for Austin, Texas.
Tax Rate It refers to the tax rate for a particular region in percentage. For example, the tax rate in Austin, Texas is 8.25 (percentage).
Exemption Reason Users have to enter why a customer/transaction/item is exempt from sales tax. For example, Child Care and Non Profit Organizations are exempt from tax.


Enabling Sales Tax

When you create a new organization or when you sign up into Zoho inventory for the first time, you have to enable sales tax inorder to have to reflected on all your modules. Lets take a look at how to enable the sales tax:

Enable sales tax

New tax page on enabling sales tax


Create a new tax

Before using sales tax in your transactions, you need to create a new tax. For example, the State sales tax rate of Utah is 4.7%.

New Tax button with the drop down

Tax Authority can be created here in the New Tax form and by choosing New Tax Authority from the + New Tax drop down as well.

Create a new tax

Creating a new tax group

There might be occasions when multiple taxes need to be applied. You can club the individual taxes under a group. For example, Utah’s State sales tax rate is 4.7%, local sales tax rate is 1% and the County Option Sales Tax rate is .25%.

Create a new tax group

You’ll find that the tax group is a single entity with the percentage rate of individual sales taxes in the group summed up. This makes it easier to use tax groups in transactions.

Creating a new tax exemption

You can create new tax exemptions for customers and items. E.g. Child care and non-profit organizations are exempt from taxes.

Create a new tax exemption

Default Tax

The Default Tax will be used in transactions when tax preference (Taxable/Tax Exempt) is not set for the involved customers.

The first tax you create will be marked as the Default Tax initially. However, you can mark a different sales tax as default as well.

Default Tax can be useful for the following scenarios.

Default Tax is not automatically associated with a customer. It is only used when tax preference (Taxable/Tax Exempt) is not set for the involved customers. You can set the Tax Preference of a customer at anytime.

To mark a different tax as default:

Change default tax

Tax Authority

What is a Tax Authority?

A Tax authority is a government agency responsible for the intake of government revenue, including taxes and sometimes non-tax revenue. They involve themselves with tax collection, investigation of tax evasion, or carrying out audits.

How do I add a Tax Authority to my organization?

To add a tax authority:

Step 1

Step 2

How are tax authorities useful in Zoho Inventory?

Applying tax authority


Associating tax for a contact

Let’s say, your customer resides in Utah where a sales tax rate of 4.7% applies. Read below to find out how you can associate this rate to the customer.

Associating tax for a contact

Making a contact nontaxable

There might be occasions where your customer is a non-profit organization which is exempt from tax. You can make a particular customer non-taxable by following the below steps.

Making a contact nontaxable


Sales Tax in Items

You can also choose tax preferences for items.

Sales tax in items

Making an item nontaxable in invoices

You can make a particular item non-taxable in an invoice.

Sales Orders and Invoices

Sales Tax in sales orders and invoices

After associating specified sales tax for contacts, the next step is applying sales taxes to the sales orders and the invoices you raise. If you choose a customer whom you have already associated tax with, then the corresponding tax will be applicable to all taxable items. However, if you choose to make the transaction non-taxable, you’ll be asked to enter a suitable exemption reason.

Sales tax in sales order

You can associate sales tax to your invoices (the ones you create without a sales order) similarly by following the above method in the Invoices tab.

Making a sales order or an invoice nontaxable

You can make a particular transaction nontaxable even if you have associated tax with the customer involved in the transaction. Tax will be disabled for that transaction and you’ll not be able to apply tax to individual items as well.

Exempting a sales order from tax