It is important to define the tax rate for every product. The tax rate can be set while adding a product.

This can be done as: Products -> Add new

                                                                          

On this page, the price along with the tax rate has to be defined for the product.



Alternately, the tax rate can also be defined/edited once the product has been added. This can be done as: Products -> Manage products

                                                               

On this page, the price along with the tax rate can be edited for the product.