Taxes are compulsory contributions to the state/country revenue.
One of the primary motivators for compulsory use of accounting tools is the calculation of taxes. ERPNext allows you to make configurable tax templates that you can apply to your sales or purchase transactions.
1. Tax Accounts
For Tax Accounts that you want to use in the tax templates, go to:
Home > Accounting > Chart of Accounts
Select an account and click on edit. Select the ‘Account Type’ as ‘Tax’ for the account.
2. Sales Taxes and Charges Template
Sales Taxes and Charges Template fetched taxes for your sales transactions like Sales Order and Sales Invoice.
3. Purchase Taxes and Charges Template
Purchase Taxes and Charges Template fetched taxes for your sales transactions like Purchase Order and Purchase Invoice.
4. Item Tax Template
The tax set in Item Tax Template applies specifically to an Item or an Item Group. It is given preference over the Sales/Purchase Tax Template.
5. Tax Category
Tax category helps in automatically applying sales/purchase tax templates in your transactions based on the customer/supplier chosen.