Tax and Calculation Settings in Billing as a Service

Accurate tax configuration ensures that every quotation, invoice, and sales document in Billing as a Service follows the correct tax rules automatically. You can manage tax behavior, calculation logic, and rounding precision directly in the Tax Configuration section of your settings.

Sales Tax

The Sales Tax tab allows you to define how item prices and taxes are applied in your system.

Default Item Price Tax Inclusion

Determine whether item prices include or exclude tax by default. This setting ensures consistency across all quotations and invoices.

Adding a New Tax

To add a new tax rule, click +Add Tax and fill in the following fields:

• Name: The name of the tax (e.g., VAT, GST, Service Tax).

• Abbreviation: A short code for easier reference (e.g., VAT10, GST7).
  

  

  
  

• Tax Rate (%): The percentage rate applied to taxable items.

• Description: A short note about what the tax applies to or where it’s used.

• Tax Calculation:

  1. Tax included in total — use when tax is part of the item price.

  2. Tax deducted from total — use when tax is applied after subtotal calculation.

• Compound Tax: Enable this option if the tax should be calculated on top of another tax (e.g., regional + federal).

Read this blog to learn about Item Catalogs.

Calculation Settings

The Calculation Settings tab controls how tax and price values are rounded and calculated in your system. Fine-tuning these parameters ensures your totals remain consistent and accurate across all transactions.

• Intermediate Rounding Precision: Specifies the level of precision used in intermediate tax calculations. For example, a precision of 4 means values are rounded to four decimal places (e.g., 0.1234).

• General Rounding Precision: Determines how many decimal places are used for general numeric values, such as totals or subtotals.

• Tax-Specific Rounding Precision: Sets the rounding precision specifically for tax amounts, ensuring consistent results in tax summaries and reports.

• General Rounding Method: Defines the approach used to round general values — whether to round normally, always downward, or always upward.

• Tax-Specific Rounding Method: Determines how tax amounts are rounded in calculations. You can choose to round normally, always down, or always up based on your financial requirements.
  

  

  
  

• Tax Calculation Method: Specifies whether taxes are calculated per line item or based on the overall document total.

  
  

  • Line Calculation applies tax individually for each product or service.

Example:
Item A: $100, tax 10% → $10
Item B: $200, tax 10% → $20
Total tax = $10 + $20 = $30

Example if items have different tax rates:
Item A: $100, tax 10% → $10
Item B: $200, tax 5% → $10
Total tax = $10 + $10 = $20

• Total Calculation applies tax once on the final total amount.

Example:
Total of items: $100 + $200 = $300
Tax 10% on $300 → $30

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