Purchase Taxes and Charges may be applied to any item you buy.

The Purchase Taxes and Charges Template resembles the Sales Taxes and Charges Template. Templates generated from this form can be applied to Purchase Orders and Purchase Invoices for internal documentation.

Ensure that Tax Accounts designated for use in the tax templates have their Account Type field set as ‘Tax’.

To access Purchase Taxes and Charges Template, go to: > Home > Buying > Settings > Purchase Taxes and Charges Template

1. How to add Purchase Taxes/Charges via a template

Before creating a new template, note that templates are already created for many of the commonly used taxes.

1. Click on New.
2. Enter a title name for the Tax.
3. Under type, set on what the tax will be calculated and the tax rate. There are five options under type for which tax will be calculated.
   1. Actual: On the actual amount of each item.
   2. On Net Total: On the grand total of all the items.
   3. On Previous Row Amount: This is for compounding the charges. For example, cess charges over the amount to which tax was already applied in the previous row.
   4. On Previous Row Total: Same as above but applied on the total bill and not just the amount of an item.
4. Select an account head which has pre set tax rates or create your own.
5. Selecting default will apply this template by default for new Purchase transactions.
6. Save.

Inter State: Applicable for India. When selecting a customer in a Sales Invoice or Delivery Note, if the GST codes of the place of supply and the customer’s shipping address do not match, the template marked as ‘Inter State’ will be designated as the taxes template. If the place of supply and shipping address are identical, the default taxes template will be applied. This rule also extends to Purchase Invoices, where the templates are determined based on the addresses provided. For instance, IGST.

2. Features

2.1 Purchase Taxes and Charges table

• Consider Tax or Charge for: Total – for the total of all items. Valuation – for each item. Valuation and total – apply tax/charge to both. 
• Add or Deduct: Indicates whether you want to add or deduct the tax from the item. 
• Reference Row #: If the tax is based on “Previous Row Total,” you can select the row number which will serve as the base for this calculation (default is the previous row). 
• Is this Tax included in Basic Rate?: If checked, the tax amount will be considered as already included in the Print Rate / Print Amount. 
• Account Head: The Account ledger under which this tax will be booked. If you select VAT or any other preset heads, the rate will be automatically filled. 
• Cost Center: If the tax/charge is an income (like shipping) or expense, it needs to be booked against a Cost Center. 
• Description: Description of the tax (that will be printed in invoices/quotes). 
• Rate: The Tax rate, e.g., 14 = 14% tax. 
• Amount: The Tax amount to be applied, e.g., 100.00 = ₹100 tax.

3. Related Topics

1. Purchase Order
2. Buying Settings