RisingERP - Item Tax Template

Item Tax Template

The Item Tax Template proves invaluable for item-specific taxation within the system.

In cases where certain items deviate from the standard tax rates assigned in the Taxes and Charges table, the creation of an Item Tax Template allows users to specify unique tax rates for individual items or item groups. The rate assigned in the Item Tax Template takes precedence over the standard tax rate set in the Taxes and Charges table.

1. Prerequisites

Before utilizing an Item Tax Template, it is recommended to set up the following:

1. Item
2. Enable 'Automatically add Taxes and Charges from Item Tax Template' in Account Settings

2. Creating an Item Tax Template

Follow these steps:

a. Navigate to the Item Tax Template list and select New.

b. Provide a title for the Item Tax Template.

c. Choose an account and set the overriding tax rate. Add additional rows if necessary.

d. Save the template.

Now, the Item Tax Template is ready to be assigned to an item. To do so, go to the Item, locate the Item Tax section, and select the relevant Item Tax Template.

Note: Avoid using the Sales/Purchase Template selected in Tax Rule to prevent interference. If the same tax rates are desired for Tax Rule and Item Tax Template, use a distinct name for the Sales/Purchase Tax Templates.

2.1 Indicate Tax Applicability in the Item Master

For items with different tax rates, alter the tax rate in the Item master. Navigate to the tax table in the Item, add a row, select the tax type, and modify the rate. This new rate takes precedence over the template when creating an order or invoice.

2.2 Tax Calculation in Transactions

In sales transactions like Quotation, Sales Order, and Sales Invoice, taxes on items are calculated based on the Sales Taxes and Charges Template selected. However, if items have an Item Tax Template linked, taxes are calculated based on the rates specified in the Item Tax Template, not the rates in the Sales Taxes and Charges Template.

2.3 Item Tax Template for Each Item in a Transaction

Users can manually select a different Item Tax Template for each item in a transaction.

2.4 Item-Wise Tax on an Item Group

Assign the Item Tax Template to an Item Group by modifying the Item Tax table in the Item Tax section within the Item Group document. This template applies to all items in the group, unless an individual item in the group has its own Item Tax Template.

2.5 Validity of Item Taxes

Validity can be assigned to tax templates. Based on the posting date of the transaction, a valid tax template will be automatically fetched.

2.6 Additional Points to Note

1. If the Tax Category is empty, the default Item Tax Template applies to items in transactions.
2. Different Item Tax Templates can be applied for different Tax Categories.
3. For an Item Tax Template to override taxes, a row in the Taxes and Charges table with the same tax Account Head and a standard tax rate must exist.
4. To apply taxes only to items with an Item Tax Template, set the standard tax rate as 0.