How to Apply Sales Taxes & Charges Account Setup in ERPNext

In this tutorial, we will learn about Sales Taxes, and Charges in ERPNext.

In sales, or purchase transactions, there are many taxes or charges that are applied over, and above the value of the goods or services. In ERPNext, these can be applied through taxes in the "Taxes and Charges" table.

On Actual Basis:

Here, whatever amount you type in at the time of the transaction will be applied. We generally use this for transport, packing, loading, and  unloading charges.

On Net Total:

Here, you mention the percentage rate that will be applied to the net total value. Most taxes will be applied in this way.

On Previous Row Amount:  

If you have taxes applied on Previous Row Amount, For an Instance, Cess. this option must be selected. Here, you have to give the row number on which this percentage of tax will be applied.

On Item Quantity:

If there are some charges like transportation may be applied on an item quantity basis, you can choose this option.

On Previous Row Total:

When taxes are applied not only on the net total but also on incidental charges like transportation, packaging, etc., this option comes in handy. We use this option for GST when the template has other incidental charges.

Once you have applied these taxes, the sum will show in "Total Taxes and Charges". This will also update the grand total of the invoice. But sometimes, it may happen that the taxes are included in the price of the product, and you want the taxes to be calculated for regulatory purposes but don’t want them to be added to the net total. In this case, you can choose the checkbox "Tax included in Basic Rate".

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