---
title: "Tax"
description: "Configure taxable regions and their component rates, select inclusive or exclusive pricing, handle withholding and exemptions, and see what an invoice records."
canonical_url: "https://twominutebilling.com/help/developers/concepts/tax"
---
# Tax

> Configure taxable regions and their component rates, select inclusive or exclusive pricing, handle withholding and exemptions, and see what an invoice records.

You configure tax per business, and tmbilling computes it per invoice line.

## Place of supply

The place of supply decides where a sale is taxed: your customer's country, and their state or
province where the regime is sub-national, read against where you are registered.

That is why a customer's address is a tax input rather than a shipping detail.

## Configure a tax region

A region is a country you have made taxable:

<endpoint method="POST" path="/v1/businesses/{biz}/tax_regions">



</endpoint>

<endpoint method="GET" path="/v1/businesses/{biz}/tax_regions">



</endpoint>

Each region holds its regime, whether your prices are inclusive or exclusive, your registration,
and the gates that switch tax off entirely — reverse charge, export and special economic zones.

### Set the component vector

A region's tax is a vector of components, not a single percentage. A domestic Indian sale carries
CGST and SGST as separate components, while an inter-state sale carries IGST instead. Both print
separately, because that is what the document has to show.

<endpoint method="PUT" path="/v1/businesses/{biz}/tax_regions/{txg}/components">



</endpoint>

Sets the component vector for one state scope.

<endpoint method="PUT" path="/v1/businesses/{biz}/tax_regions/{txg}/state_registrations">



</endpoint>

Records your registration in one state — in India, that state's GSTIN — for your own records.
The domestic and inter-state split comes from the region's home state compared with the buyer's
billing state. The GSTIN printed on an invoice is the business's `tax_registration_number` (or the
organization's, when the organization issues invoices). See
[India GST invoices](https://twominutebilling.com/help/developers/recipes/india-gst-invoices).

## Create a tax profile

<endpoint method="POST" path="/v1/businesses/{biz}/tax_profiles">



</endpoint>

A profile holds the rates for one class of product, which is how a digital service and a physical
good get taxed differently in the same region. Give each product a `tax_code` to select its
profile.

## Select inclusive or exclusive pricing

Set `tax_behavior` on each price:

<table>
<thead>
  <tr>
    <th>
      Behaviour
    </th>
    
    <th>
      <code>
        amount_minor
      </code>
      
       means
    </th>
    
    <th>
      Your customer pays
    </th>
  </tr>
</thead>

<tbody>
  <tr>
    <td>
      <code>
        exclusive
      </code>
    </td>
    
    <td>
      the net amount
    </td>
    
    <td>
      More than the list price — tmbilling calculates tax and adds it.
    </td>
  </tr>
  
  <tr>
    <td>
      <code>
        inclusive
      </code>
    </td>
    
    <td>
      the total amount
    </td>
    
    <td>
      Exactly the list price — tmbilling extracts the tax from it, and the net is what remains.
    </td>
  </tr>
</tbody>
</table>

<note title="Inclusive tax comes out of one combined rate">

For an inclusive line, tmbilling derives the components from the single combined rate. Backing
each component out of the gross separately does not reconstitute the original amount.

</note>

## Handle withholding

Some jurisdictions require your buyer to withhold tax and remit it directly.

Set `withholding_rate_bps` on the customer. It reduces what they pay you without reducing what
they owe: the invoice records the full amount and the withheld portion separately, so the
difference is explained rather than looking like a short payment.

## Apply exemptions

Set `tax_exempt` on a customer to switch tax off for them.

`vat_number` drives reverse charge where the regime provides for it: tmbilling zero-rates the sale
and the obligation moves to your buyer. Validate the number rather than trusting it:

<endpoint method="POST" path="/v1/businesses/{biz}/customers/{cus}/validate_vat">



</endpoint>

## Expect each invoice to snapshot its tax context

When tmbilling issues an invoice, it snapshots your registration, the place of supply and the
rates that applied.

So changing a customer's address, or a region's rates, does not re-tax a document that already
exists. New invoices use your new configuration.

## Related

- [Set up tax in the dashboard](https://twominutebilling.com/help/guides/set-up-tax)
- [India GST invoices](https://twominutebilling.com/help/developers/recipes/india-gst-invoices)
- [GST and VAT on subscription invoices](https://twominutebilling.com/product/tax)


## Sitemap

See the full [sitemap](https://twominutebilling.com/sitemap.md) for all pages.