ERPNext GST - Tax Rules

I am piloting ERPnext for a customer.

An issue I have noticed is that Tax rules are set up by Item Category.

ie, I can setup a tax rule specific to an item/itemcategory/customer etc.

Ideally, Tax rules should not get in the way of Item categorization. For instance, I would have to setup a category for 5% gst, if I wanted to use this tax rule.

Rather, we should have an ‘Item Tax Category’ as a custom field. Tax rules can be defined based on this Field. Ie, tax does not impact my business analysis.

Similarly - customers can have a customer tax category. So we can set up tax rules according to customer category.

Didi you try Item Tax Templates?

Thanks @rmeyer, Item tax templates don’t differentiate between sales tax and purchase tax. Which is a requirement for GST

Check the item Master. The item Tax Tab is where yo set this. You’d want to do that only if the tax rates are different for different items.

If all your items have the same rate while buying and same rate when selling, all you will need is this detail captured in the Purchase Taxes and Charges Template and Sales Charges and Taxes Template.

Are your Tax Rates different for Purchases and for Sales? You should be able to use the Tax Category and still be able to pull the Purchase Tax rates into Purchase transactions and sales tax rates into sales transactions.

Hope this helps.

Thanks

Jay

@JayRam you are absolutely correct.
But some company (in India) same items are sold to in state (Cgst-Sgst) and out of state (igst) there we can’t integrate on item level

The way GST works is as follows:

a. Schedule of HSN Codes v Tax rates is published by the govt. Hence, for a transaction we need to look at tx date and HSN code to look up the rate. 5%/12/18/28%. We can setup the rate % for an item as well.
b. Purchase: Vendor GST state is compared to mine. If its the same [CGST/SGST Input]. If different [IGST Input]
c. Sales: Customer GST State is compared to mine. If its the same [CGST/SGST Payable], if different [IGST payable]

Typically I setup four tax rates for every rate.
IGST Input
CGST+SGST Input
IGST Output
CGST+SGST Output

Ideally, I would like to build tax rules so that it accepts:
a. Item Tax Category
b. Buyer State
c. Vendor State
d. Transaction type (Sales/Purchase)

For POS transactions B&C are not needed, since all sales are local.

@JayRam - I have a situation where purchase tax rates are different than sales tax rates for an item. This situation is quite common world wide for import-export companies - where there is no VAT on suppliers invoice for imported items and VAT to be charged for domestic sales.

In such a scenario - will appreciate how to setup variable tax rates for sales and purchases as suggested by you. If you use the sales /purchases taxes template - these only apply to Net total amongst other options - but have no option to apply to item amount (line item total). If you have multiple items on a sales invoice - with differing tax rates - is it possible to use these sales/purchase tax templates? Using item_tax templates - can work - but those do not allow for different tax rates for sales and purchases… Appreciate your guidance.

Hi,

I think you will need a bit of customization/scripting to address your scenario. I don’t think there is a way to address it out the box. The scenario being: Different Tax Rates for Purchase and Sales. Different Tax Rates for different items. Need to make a single transaction for items with different tax rates.

A slightly complicated way (from a configuration perspective) but simpler from a customization perspective is to have two separate items for Purchase and Sales and connect it up with a BOM.

Hope this helps.

Thanks

Jay