Tax/VAT Settings

As a seller, you may need to charge taxes on every sale made on your website. This will help you report and remit to taxes to the governments.

It is advisable to refer to a local tax authority or a tax accountant to make sure you charge correct tax rates from your customers, and also you file and pay the taxes correctly.

From this section, you can set up taxes to automatically handle the tax calculations. You can choose to charge the taxes on Order Subtotal and/or Shipping Charges.

Before you start configuring the tax rates, you need to define how you want to charge the tax. To set-up this configuration, navigate to the Admin >> Store Configuration >> Site Settings >> ‘Store Configuration’ tab >> ‘Tax Calculation based on’ setting. You will get 6 different options to choose from; Not Applicable, Flat - 0, Country - 1, Country and State - 2, Country and Zipcode - 3 and Third Party API - 4.

Based on the above setting, you can add tax rates in the Tax/VAT settings section.

If you want to charge a flat tax rate then this is the option you need to select in the Site Settings.

Next, from the Tax/VAT settings page, click on the ‘Add’ button at the top-right corner and define the flat tax rate you are willing to charge. Add the a flat rate in percentage and enable the Calculate on Shipping Price? setting if you want to also calculate the defined tax rate on the shipping charges too.

You can anytime edit the tax rate or delete it.

If you operate in several countries, then set the Tax calculation as Country – 1. This will allow you to add taxes country-wise.

Click on ‘+Add’ button, select the country from dropdown, enter the Tax rates in percentage and click on Save. You also get the option to add tax in the shipping price.

You can anytime edit the taxes with the edit option. In addition to the Add button we have given an Import button which will help you add taxes of several countries at once. Just like other import functions available on the Admin you can download a sample sheet, fill it using the instructions and upload the same sheet.

If your store operates for several countries and you are willing to charge taxes according to different states, then set the Tax calculation as Country and State – 2. This will allow you to add taxes country-and states wise.

Click on the ‘+Add’ button at the top right corner to add tax percentage as per states. Select any country from the dropdown, select the state or enter the state name. The state dropdown will appear if you have added states from the Country/States section.

Determine the tax percentage and choose to apply the rates on shipping price or not.

You can anytime choose to edit or delete the tax rates of different cities.

Similar to country – 1, you can choose to bulk import tax rates for country and states.

You can also add tax rates depending on the zip codes, for this set the Tax calculation as Country and Zip codes – 3. This will help you micro-manage your tax rates.

To add any tax rate according to zip code, click on the ‘+Add’ button. Select the country name, enter zipcode and tax value, then click on save. Similar to other tax types, you can import tax rates in bulk using the import functionality.

This method is applicable for USA and Indian merchants. As, most of the Third Party Tax APIs such as TaxCloud operate only for the USA.

Indian merchants can refer to the GST guide, and set up taxes on their store accordingly.

There are other APIs such as TaxJar Setup TaxJarand AvaTax which operates in various countries such as Canada, Australia and EU.