How to Apply Purchase Taxes & Charges in ERPNext

In this tutorial, we will learn to apply taxes and charges for Purchase and Payment in ERPNext.

The purchase taxes and charges have all the features we discussed in Sales Taxes and charges, which you can watch first through the link given above, and in the description.

So we will create one purchase transaction and apply taxes the same way we learned in the previous video.

Now, the purchase taxes have two more features to learn:

Feature 1 is Consider Tax For:

Consider Tax For Valuation:

If you have paid some incidental charges related to this purchase, you can choose this option as Valuation. Now the tax or charges will increase the valuation of the product, but the total of the invoice value will not increase. For example, you want to add import duty or transportation charges that were paid by you directly. So you don't want to pay them to the supplier, but they should definitely be considered for calculating the landed cost of the items.

Consider Tax for Total:

Exactly the opposite. Sometimes there are charges that your supplier adds to their sales invoice, but they are refundable to you in some way. So you want them to be applied and considered for calculating the total payable, but you don't want the valuation of the goods to go up. India's GST can be one such example, which should be considered for the Total.

Consider Tax for Valuation and Total:

As the name suggests, this will be added to the valuation of goods as well as the total payable for the supplier. Any transport, packaging, or loading charges should be added in this way.

Feature 2 is you can Add or Deduct charges:

Mostly, we always add taxes and charges. But sometimes, we need to deduct some charges from the purchase side. For example, any quality damage claims, cash discounts, etc. In this case you will set the value as deduct.

Taxes and Charges in Payment Entry:

Now, coming to payments, there are times when you are making or receiving advance payments and you want to apply taxes there. You can apply taxes the same way we learned for sales and purchase.

Here, if the taxes are part of the paid or received amount, you have another checkbox "Considered In Paid Amount" to avoid getting taxes added to the total payment.

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