Creating Sales Tax Templates in ERPNext: Tutorial
Overview
In this tutorial, we will learn how to create a sales tax template in ERPNext. This is a useful feature to automate calculation of sales tax when creating a quotation, sales order or a sales invoice.
Navigating to sales tax template workspace
To create a new sales tax template, go to the dashboard and click on accounting icon and select the taxes module. By default, you will be directed to the workspace for sales tax templates. You can also use the search bar feature for faster navigation. To use the search bar, press Ctrl+K anywhere inside ERPNext and search for "sales taxes and charges template list".
Tutorial
For demonstration, I will create two sales tax templates for calculating sales tax in India. The first template will calculate 5% GST on the net total for inter-state transactions, with the entire tax amount recorded as IGST. The second sales tax template will calculate 5% GST on the net total for intra-state transactions and divide the tax equally into two components: CGST, and SGST.
Let's create the first template by clicking on the the "add sales taxes and charges template" button on the top-right corner. I will specify the title as GST 5% (IGST) [and add IGST inside parenthesis]. If you have multiple companies, you can select the company to which this template should be applied. Next, in the sales tax and charges table, I will add a new row and select "on net total" as the type. Under account head, I will select IGST under duties and taxes account and set the tax rate to 2.5%. Note that the IGST account is not created by default in ERPNext. You have to manually create one in the charts of accounts. Also, you should be careful that all your sales tax sub-accounts are under duties and taxes and not under tax assets. This is because sales taxes are liabilities of your companies and not an asset. Finally, to save this sales tax template, click the save button on the top-right corner.
Let's create the second template by clicking on the the "add sales taxes and charges template" button on the top-right corner. I will specify the title as GST 5% (CGST+SGST) [and add CGST+SGST inside parenthesis]. In the sales tax and charges table, I will add a new row and select "on net total" as the type and under account head, I will select CGST under duties and taxes account and set the tax rate to 2.5%. I will add another row and select "on net total" as the type and under account head, I will will select SGST under duties and taxes account and set the tax rate to 2.5%. Like IGST, you have to manually create CGST and SGST account under duties and taxes. Finally, I will save this template by clicking the save button on the top-right corner.
Discussion
You have the option to set one of the sales tax template as the default for all your sales transactions. For example, I will set the sales tax with 18% IGST as the default template. Now, if I create a sales invoice, ERPNext will automatically use the default tax template to calculate sales tax. For a more precise control over how different tax templates are automatically applied to different customers and items, you can use the tax rule feature.
Author
Anurag Gupta is an M.S. graduate in Electrical and Computer Engineering from Cornell University. He also holds an M.Tech degree in Systems and Control Engineering and a B.Tech degree in Electrical Engineering from the Indian Institute of Technology, Bombay.
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