I’m working on an Implementation and a very basic question pops up. ERPNext has
-> Sales Taxes and Charges Template
-> Purchases Tax and Charges Template
-> Item Tax and Charges Template
The Sales and Purchase Taxes show up in their respective forms, which si great. And Item Tax shows up on both equally which is ok. The issue here is that as with all things tax especially VAT there is a credit and debit to each transaction. If I store an item with 5% Item Tax as a Credit when I purchase, it calls for the same Credit Tax when I want to sell.
The purpose of Item Tax is to use special tax rules based on the type of item we are selling. Many countries have special rates for first necessity like milk and flour. While luxury items fall under a different tax rate. Item Tax template works perfectly in those situations. But if the same item is being bought and sold, the same tax rate is being brought up. Which again is not so bad, only issue is when we try to route the debits and credits into journal entries the credit account should be an asset while the debit account should be a liability.
Basically what I am asking, is there a way I can route Item Tax used in purchase to go into a seperate accounting chart compared to when that Item Tax is being used in sales?