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How to Configure Rates & Tax

Set up rate cards and tax structures correctly.

6 min read Updated Jun 2026   How-To

Purpose

Define one or more rate standards and link them to tax structures so invoices price and tax items correctly without per-line intervention. Get this right at install time and 90% of the per-invoice fiddling later disappears.

Before you begin

  • List of selling prices by location / customer category (retail / wholesale / staff).
  • GST rates per HSN / item category — check current rates on the GST portal if any have changed at year-start.
  • Decision on whether prices are tax-inclusive or tax-exclusive (one or the other — do not mix per rate standard).
  • Ledger accounts for CGST payable, SGST payable, IGST payable, and CESS where applicable.

Steps

  1. Start → Administration & Setup → Rates Setup → Rate Standard.
  2. Click New and create a rate standard (e.g. Retail, Wholesale, Distributor, Staff).
  3. Mark the standard as Tax-Inclusive or Tax-Exclusive. Most retail-counter setups are inclusive; B2B / distribution setups are exclusive.
  4. Go to Tax Setup → Tax Structure. Create structures for each combination you bill — e.g. GST 5%, GST 12%, GST 18% Intra, GST 18% Inter (IGST).
  5. Link each tax structure to the right ledger accounts (CGST payable, SGST payable, IGST payable). The system uses these to build the tax journal automatically.
  6. Open Item Setup → Item Master. For each item, set the default rate standard and default tax structure. Use the bulk-edit grid for speed when you have hundreds of items.
  7. Verify by raising a test invoice — the rate and tax should auto-populate, and the journal preview should split into the correct GST heads.
  8. Optionally, on the Customer Master for B2B customers, set their default rate standard so the right price is picked even if the operator forgets.

What success looks like

  • New invoices auto-price from the rate standard linked to the customer or counter.
  • GST is computed and split correctly into CGST/SGST or IGST without per-line intervention.
  • The GST Reports run cleanly — no "missing tax structure" rows.

Troubleshooting

Rate column on a new invoice is zero.
The item has no rate in the selected rate standard. Either add it via Rate Standard → Items, or pick a different rate standard for the customer.
Tax does not split into CGST + SGST — everything goes to IGST.
The customer's state in the master differs from your billing location's state. Fix either the customer master or the location master so they match for intra-state sales.
Total in the invoice differs by paise from manual calc.
You probably mixed tax-inclusive and tax-exclusive structures on different lines. Move to one mode per rate standard.

Tips

  • Keep the number of rate standards small — three to five covers most businesses.
  • When GST rates change at year-start, edit the existing structure rather than creating a new one — this preserves history without breaking new invoices.
  • Audit your rate standards quarterly against your published price list — drift creeps in.
  • Warning. Changing an item's default tax structure does not retro-price already-posted invoices; it only affects new ones.