How To Setup Service Tax In ProfitBooks

Setting up Taxes in ProfitBooks is easy. Just to go Accounting menu and click on Taxes.

In this article, we’ll explain how to setup Service Tax, Swacch Bharat Cess and Krishi Kalyan Cess:

From Taxes screen, click on Add New Tax button. Here is a guide on adding new taxes.

Our primary tax is Service Tax. So, enter the details as mentioned in the image below. Please note that the new rate of 14% is effective from 1st June 2016.

Now, click on ‘Add Linked Tax’ and enter the details for Swachh Bharat Cess as mentioned below. Its calculated at 0.5% on the base price.

Click on ‘Add Linked Tax’ again to add Krishi Kalyan Cess. Its also calculated at 0.5% on the base price.

Now, you can select the new service tax on invoice, estimate, PO or purchase screen. SCB and KKC will be added automatically. Just select an item first and then apply the tax.

Important Notes

Here is a quick calculation for new service tax rates that is effective from 1st June 2016.

Lets assume that you have a service and different taxes with following sample values :
Service base price – Rs 100
Service Tax (Primary Tax) – 14%
Swachh Bharat Cess (Linked Tax) – 0.5%
Krishi Kalyan Cess (Linked Tax) – 0.5%
Total price after taxes – Rs. 115

Taxes are never deleted from your account even if you mark them as inactive. So, you might get an error message if a certain tax is already in the system. If you are unable to save new taxes, please change the name slightly. For example, add a .(dot) at the end of a tax name and try again.

Deleting The Tax

In ProfitBooks, you can mark tax as inactive instead of deleting it. This way association of that tax with old transactions is preserved. You can mark old service tax as inactive so that it won’t appear on the vouchers.

To do this, just click on the ‘Mark Inactive’ button on respective tax section when you open Taxes page.