Purchase Taxes and Charges Template in ERPNext
The Purchase Taxes and Charges Template in ERPNext is used to define tax and additional charge structures that apply specifically to purchase transactions such as Purchase Orders and Purchase Invoices.
It functions similarly to the Sales Taxes and Charges Template but is used for vendor-side accounting and procurement records.
Purchase Taxes and Charges Templates ensure accurate recording of taxes, duties, and additional charges during procurement transactions.
Access Path
You can access this feature in ERPNext at:
Home > Buying > Settings > Purchase Taxes and Charges Template
1. Creating a Purchase Taxes and Charges Template
Follow these steps:
- Click New.
- Enter a title for the tax template.
- Select the calculation Type.
- Define tax rate or fixed amount.
- Assign the appropriate Account Head.
- (Optional) Mark as default for automatic application.
- Save the template.
2. Tax Calculation Types
ERPNext supports multiple calculation methods:
- Actual: Fixed tax or charge amount applied directly.
- On Net Total: Percentage applied on total item value.
- On Previous Row Amount: Tax calculated based on previous tax row amount.
- On Previous Row Total: Tax calculated on cumulative total of previous rows.
3. Key Features
3.1 Consider Tax or Charge For
Defines how the charge is applied:
- Total: Applied on overall invoice total
- Valuation: Applied per item for costing
- Valuation and Total: Applied to both
3.2 Add or Deduct
Determines whether the charge is:
- Added to total cost
- Deducted from total amount
3.3 Reference Row
Used when calculations depend on a previous row in the tax table.
3.4 Tax Included in Basic Rate
If enabled, tax is considered already included in item price.
3.5 Account Head
Defines the ledger where the tax will be recorded. Must be set as “Tax” account type.
3.6 Cost Center
Used to allocate tax or charges to a specific cost center for reporting.
3.7 Rate and Amount
- Rate: Percentage-based tax (e.g., 14 = 14%)
- Amount: Fixed charge (e.g., ₹100)
4. Inter-State Tax Handling (India Specific)
If Is Inter State is enabled:
- IGST is applied when supplier and shipping state differ
- CGST/SGST applies when within the same state
- Automatically determined based on GST codes
5. How It Works in Transactions
During Purchase Orders or Purchase Invoices:
- Selected template is applied automatically or manually
- Tax rows are evaluated based on Type and sequence
- Final totals include taxes and charges accordingly
6. Related Topics
- Purchase Order
- Purchase Invoice
- Buying Settings
- Sales Taxes and Charges Template
- Tax Rule
SUMMARY
Purchase Taxes and Charges Templates in ERPNext define how taxes, duties, and additional charges are applied on procurement transactions. They ensure consistent cost calculation, proper accounting entries, and accurate purchase reporting.
