GST Tax rate rule creation

India localization suite tax helps to create India GST tax rate rule which is important for tax calculations in purchase and sales transactions. HSN codes are assigned for each item and the tax is calculated in transactions according to the GST tax rate rule created using the HSN codes. Before creating tax rate rules, HSN codes should be created in NetSuite.

To enter the 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 GST Identification Number (GSTIN).
   • Composite Dealer – Select this type if the subsidiary is registered under the composition scheme of GST and has GSTIN. (Composite dealers are small taxpayers who have a turnover of less than 1 crore.).
4. In the Available On the field, select which transaction 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 vendor or customer’s registration type under this tax rule:
   • 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 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).(SEZs are located in a country but it is considered as a different zone from the country. So trade between SEZs are interstate transactions. 
   • 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. HSN codes are used for goods and SAC codes are for services.
7. In the GST Rate field, select the tax rate that will be applied to this rule.
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. IGST is selected for those transactions which are between two different states.
     1. Check  ‘Within the State’ box if the supply of goods and services is within the same state.
     2. Check ‘Within the Union Territory’ box if the supply of goods and services is within the Union territory.
   • 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 two sections, namely SGST and CGST / UTGST. Intrastate is selected for the transactions within one state.
9. In the Effective From field, enter the first date this tax rule can be applied to transactions. Tax rate rule can be used from this date.
10. In the Valid Until field, enter the date this tax rule can no longer be applied to transactions. The tax rate rule can be used only to this date.
11. Check the Taxable box if you want this tax rule to calculate India GST on transactions.
12. Check the Amount Based box if you want the HSN or SAC Code to have an India GST rate based on an amount range. If the amount is added here, the tax will not be calculated until this amount.
13. Check the Reverse Charge box if a 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.
14. Check the Ineligible for ITC box if the tax rule is not eligible for an 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.
15. Click Save.

It is better to import GST tax rate rule through CSV records if there are a lot of tax rate rules to create. Sometimes GST tax rate rule will show error while saving if tried to create tax rate rule manually. It is one of the limitations of India localization suite tax. If the tax rate rule is used in transactions, it cannot be edited or deleted. To get the related transactions of a tax rate rule, create saved search using HSN or sac code.