> ## Documentation Index
> Fetch the complete documentation index at: https://documentation.claruswms.com/llms.txt
> Use this file to discover all available pages before exploring further.

# Managing Different Rates of Tax

> Choose between no tax, tax-exclusive, and tax-inclusive options when creating invoices to handle different VAT scenarios.

## Tax Options for Invoices

When you create an invoice, you can choose how tax is applied. The **Amounts Are** dropdown provides three options:

### No Tax

This option is for items that do not have tax applied. If you choose **No Tax**, the entire invoice must be tax-free.

<Warning>If you have any taxable items alongside non-taxable ones, you will need to create a separate invoice for the taxable items.</Warning>

### Tax Exclusive

The price of each item does not include tax, but tax will be added. The tax amount is calculated separately and then added to the total cost.

### Tax Inclusive

The unit price already includes tax. The total cost will reflect this, and no extra tax will be added separately.

<Info>The system automatically calculates invoice totals based on whether tax is included or not. You can edit the tax option before finalising the invoice.</Info>