Sales Taxes and Charges Template
You can have default tax/charge setups for sales transactions like Quotations, Sales Orders, Delivery Notes, and Sales Invoices with ERPNext utilizing the Sales Taxes and Charges Template.
It maintains uniformity in charging VAT and other charges (such as shipping, insurance, or surcharges) without wasting time.
Setup Tax Accounts
In order to utilize Tax Accounts in templates, you need to make sure that their Account Type is Tax in the Chart of Accounts.
Accessing the Sales Taxes and Charges Template
To see or edit templates, Go to:
1. Adding Sales Taxes / Charges through a Template
ERPNext offers some standard templates for VAT. You may use them or define your own.
Go to the Sales Taxes and Charges Template list and click on New.
Enter a Title (e.g., Standard VAT 20%).
Add tax/charge rows in the Sales Taxes and Charges table:
Type – select how the VAT/charge must be applied:
Actual: Fixed rate.
On Net Total: Percentage of the net total of items.
On Previous Row Amount: Compound VAT/charge on previous row amount.
On Previous Row Total: Compound VAT/charge on total inclusive of previous tax.
On Item Quantity: Charge computed as (Rate × Item Quantity).
Choose an Account Head (e.g., VAT 20%, VAT 5%). If you select a predefined VAT account, the rate will be filled automatically.
Optional: Check Default if the template is to be applied automatically in all new Sales transactions.
Save the template.
2. Features
2.1 Sales Taxes and Charges Table Fields
Every row of the table has:
Think about a tax or Charge For:
Total: computed on the basis of the total sum of all items.
Valuation: on each item individually.
Valuation and Total: on both.
Reference Row: Apply if VAT/charge is being calculated on a row above (compounding). Default is the preceding row.
Is this Tax Included in Basic Rate?
Check this box if your item prices are already inclusive of VAT.
ERPNext will calculate the net price by subtracting the VAT component.
Account Head: Ledger in which the amount is posted (e.g. VAT 20%).
Cost Centre: Needed if the charge is income (such as shipping) or expense.
Description: Caption for VAT/charge on invoices.
Rate: VAT % (e.g., 20, 5, or 0).
Amount: Flat rate charge (if using type = Actual).
2.2 VAT Rules (UK Specific)
In the UK, sales tax is VAT (Value Added Tax). Multiple VAT templates can be configured in ERPNext to support different scenarios:
Standard VAT: 20% (normal goods/services).
Reduced VAT: 5% (fuel for domestic use, children's car seats, etc.).
Zero-rated VAT: 0% (necessary goods like food, children's clothes, and books).
Exempt supplies: No VAT (education, health, insurance).
Exports (outside the UK): Normally zero-rated but need to be documented appropriately.
ERPNext VAT Application:
When the Customer is in the UK, use Standard (20%) or Reduced (5%) VAT based on the Item.
When the Customer is outside the UK, use a Zero-rated Export template.
When the Item is VAT-free or zero-rated, ERPNext can retrieve the right template automatically through Item Tax Templates.
VAT Returns can be printed from ERPNext for filing with HMRC.
2.3 Overriding Tax Rates
The. VAT rate set in the template will automatically apply to all the items in the transaction by default.
Override this if:
Certain Item or Item Groups are exempt or zero-rated.
Use an Item Tax Template on them.
ERPNext will utilize the Item Tax Template rather than the default Sales Tax Template.