Setting Up Tax Rate Rules for India GST

The India GST tax rate rules are used to calculate tax on sales and purchase transactions. On the transaction record, a HSN or SAC code is assigned per every line item. Combined with other determinants, the India Localization SuiteTax Engine SuiteApp will calculate the correct India GST tax per line item.

You can create a tax rate rule with a unique combination of the following:

Note:

You cannot create taxable and nontaxable rules with the same combinations in the same effective period.

To enter India Tax Rate Rule for GST:

  1. Go to Setup > India Localization > GST Tax Rate Rules.

  2. Click the New Tax Rate Rule.

  3. In the Subsidiary Registration Type field, select the subsidiary’s type of registration:

    • Regular – Select this type if the subsidiary is registered under GST and has Goods and Services Tax Identification Number (GSTIN).

    • Composite Dealer – Select this type if the subsidiary is registered under the composition scheme of GST and has GSTIN.

    • Exempted - Select this type if the subsidiary is to be exempted from GST.

    • SEZ - Select this type if the subsidiary is registered under GST, has GSTIN, and located within the Special Economic Zone (SEZ).

  4. In the Available On field, select the transaction type that the tax rule will be applied to:

    • Purchase Transactions – If this is selected, the Vendor Registration Type field will be available.

    • Sales Transactions – If this is selected, the Customer Registration Type field will be available.

  5. In the Customer or Vendor Registration Type field, select the registration type of the entity:

    • Regular – Select this type if the customer or vendor is registered under India GST and has GSTIN.

    • Composite Dealer – Select this type if the customer or vendor is registered under under the composition scheme of India GST and has GSTIN.

    • SEZ – Select this type if the customer or vendor is registered under India GST, has GSTIN, and located within the Special Economic Zone (SEZ).

    • Unregistered – Select this type if the customer or vendor is not registered under India GST and does not have GSTIN.

    • Overseas – Select this type if the customer or vendor is located outside India.

  6. In the HSN or SAC Code field, select the Harmonized System of Nomenclature (HSN) or Services Accounting Codes (SAC) for this tax rule.

  7. In the GST Rate field, select the tax rate that will be applied to this rule.

    Note:

    If you select Nil Rated or Exempted rate, the Ineligible for ITC box is checked by default for purchase transactions because Nil Rated and Exempted supplies cannot claim input tax credit.

  8. In the Classification of Supply field, select where the goods and services for this tax rule is classified:

    • Inter-State Supply – Select this type for Integrated Goods & Services Tax (IGST). If this type is selected, the tax rate will remain the same as the India GST rate.

    • Intra-State Supply – Select this type for Central Goods & Services Tax (CGST), State Goods & Services Tax (SGST), or Union Territory Goods and Services Tax (UTGST). If this type is selected, the India GST rate and tax amount will be divided equally into the two sections, namely SGST and CGST / UTGST.

      • Check the Within the State box if the supply of goods and services is within the same state.

      • Check the Within the Union Territory if the supply of goods and services is within the Union territory.

    Note:

    The Classification of Supply field is unavailable when the subsidiary registration type is SEZ.

  9. Enter effective period for this rule in the Effective From and Valid Until fields.

  10. Check the Taxable box if you want this tax rule to calculate GST and GST Compensation Cess on transactions.

  11. Check the Amount Based box if you want the HSN or SAC Code to have an India GST rate based on an amount range.

  12. Check the Reverse Charge box if reverse charge applies to transactions that use this tax rule. This box is available on if the Available On field is set to Purchase Transactions.

  13. Check the Ineligible for ITC box if the tax rule is not eligible for input tax credit under India GST. Tax amount applied to transactions should be added to the related item or expense cost. If this box is checked, tax rule can only be applied to purchase transactions.

  14. Check the Compensation Cess box if GST Cess applies to transactions that use this tax rule. GST Cess calculation is based on the values you enter in the following fields:

    1. Cess Rate Type – Select the GST Cess rate type from the following:

      1. Percentage – This calculates GST Cess based on the cess percentage set.

      2. Quantity – This calculates GST Cess based on the cess rate per unit and units set.

      3. Percentage + Quantity – This calculates GST Cess based on both cess percentage and cess rate per unit set.

      4. Percentage or Quantity (Higher) – This calculates GST Cess based on cess percentage or cess rate per unit, whichever set is higher.

    2. Cess% – Enter the cess percentage that you want to apply.

    3. Cess Rate Per Unit – Enter the cess rate per unit that you want to apply.

    4. Units – Select the units value that you want to apply.

  15. Click Save.

Related Topics

Setting Up the Unique Quantity Code (UQC) under India GST
Assigning India GST Tax Registrations to an Entity Record
Assigning India Tax Nature Details on an Item Record
Assigning Tax Accounts to India GST Tax Types
Setting Up the HSN and SAC Codes for India GST
Setting Up Tax Rate Rules for India GST

General Notices