## Zoho Inventory Documentation Index

Access the complete documentation index at:
https://www.zoho.com/us/inventory/llms.txt

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

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# What is a default tax and how does it work?

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.

*   When customers are imported into Zoho Inventory, 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 sales tax was enabled.
*   Here again, the **Default Tax** will be used in transactions where these customers are involved.

> 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](/us/inventory/kb/taxes/salestax-default.html#associate-tax-for-a-contact) of a customer at anytime.

To mark a different tax as default:

*   Click the gear icon on the top right corner.
*   Select **Taxes** from the drop down.
*   Hover your mouse over the tax to be marked as default.
*   Click “**Mark as default**” button that becomes available.
*   Doing this, will update this tax as the default tax.

![Change default tax](/inventory/help/images/sales-tax/sales-tax-default.png)