Tax Calculation

X POS calculates taxes automatically based on the tax template configured in the POS Profile. It supports both tax-inclusive and tax-exclusive pricing, per-item tax overrides, and multiple tax rows.

Tax Configuration

Taxes are defined in the Sales Taxes and Charges Template linked to the POS Profile. Each tax row in the template has:

Charge Types

Tax-Inclusive vs Tax-Exclusive

Tax-Exclusive (Default)

The item's selling price does not include tax. Tax is added on top.

Example: Item price = 100, Tax rate = 15%

• Net amount = 100
• Tax = 100 × 15 / 100 = 15
• Total = 100 + 15 = 115

Tax-Inclusive

The item's selling price already includes tax. The tax is extracted (backed out) from the price.

Example: Item price = 115 (tax-inclusive), Tax rate = 15%

• Tax = 115 × 15 / (100 + 15) = 15
• Net amount = 115 - 15 = 100
• Total = 115

Tax-inclusive mode is controlled by the included_in_print_rate flag on each tax row. Different tax rows in the same transaction can have different inclusive/exclusive settings.

Calculation Process

When items are in the cart, taxes are recalculated in real time. Here is the exact calculation flow:

Step 1 — Calculate Item Net Amounts

For each item in the cart:

net = quantity × rate - discount_amount

If the item has a percentage discount instead:

discount_amount = quantity × rate × discount_percentage / 100
net = quantity × rate - discount_amount

Step 2 — Apply Tax Rows

For each tax row in the profile:

1. Check inclusive flag — Is this tax included in the print rate?
2. For each item, determine the effective tax rate:
   • If the item has an item-level tax override (via item_tax_map), use the override rate for this account head
   • Otherwise, use the profile tax rate
3. Calculate tax amount based on charge type:

4. Sum the tax from all items → total for this tax row

Step 3 — Handle Extra Item-Level Taxes

Some items may have taxes in their item_tax_map that are not in the profile's tax template. For these:

1. Identify tax accounts in item_tax_map that don't match any profile tax account_head
2. Calculate: net × rate / 100 for each extra tax
3. Add these as additional tax rows in the result

Step 4 — Aggregate

The system produces an array of calculated tax rows:

Tax Display in Cart

The Cart Summary section shows tax information:

Tax-Exclusive Taxes

• Displayed as a separate line item below the subtotal
• Each tax row shows: description and amount
• These amounts are added to the subtotal to get the grand total

Tax-Inclusive Taxes

• Shown as informational text (e.g. "Includes VAT 15%: 150.00")
• These amounts are not added to the total (already included in item prices)

Summary Breakdown

Subtotal (Net Total)          1,000.00
  VAT 15%                   +  150.00    ← tax-exclusive
  Service Charge 5%         +   50.00    ← tax-exclusive
                            ──────────
  Includes GST 10%            100.00     ← tax-inclusive (info only)
                            ──────────
Grand Total                  1,200.00

Per-Item Tax Overrides

Individual items can have their own tax rates that override the profile defaults. This is useful when different products have different tax rates within the same transaction.

How It Works

1. Each item can have an Item Tax Template assigned
2. The template contains a mapping: { "account_head": rate }
3. When calculating taxes, the system checks:
   • Does this item have an item_tax_map entry for this account head?
   • If yes → use the item's rate
   • If no → use the profile's default rate

Setting Item Tax

In ERPNext, per-item tax templates are configured on the Item master:

• Item → Tax → Item Tax Template: Select a template
• The template maps account heads to rates
• Example: "Zero-Rated VAT" template maps "VAT Account" → 0%

When such an item is added to the cart, the POS automatically:

1. Loads the item's item_tax_template name
2. Loads the item_tax_map (JSON object of account → rate)
3. Applies the per-item rates during tax calculation

Tax in Payment Dialog

The Payment Dialog shows the final tax-inclusive grand total. The tax breakdown is visible in the summary section:

Tax in Printed Receipt

The printed receipt includes:

• Each tax-exclusive tax as a separate line with description and amount
• Tax-inclusive taxes as a note (e.g. "Includes VAT: 150.00")
• The grand total inclusive of all exclusive taxes

Common Scenarios

Single Tax Rate (Most Common)

• POS Profile has one tax row: VAT 15%, On Net Total
• All items taxed at 15%
• Tax-inclusive or exclusive per the profile setting

Multiple Tax Rates

• POS Profile has two tax rows: VAT 15% + Service Charge 5%
• Both applied to every item
• Calculated independently and summed

Mixed Tax Rates Per Item

• POS Profile has VAT 15%
• Some items have Item Tax Template overriding VAT to 0% (zero-rated)
• Tax is calculated per-item with the correct rate, then summed

Tax-Inclusive Pricing

• POS Profile tax row has included_in_print_rate = 1
• Item prices on shelf already include tax
• Tax is backed out mathematically: price × rate / (100 + rate)
• Grand total equals the sum of item prices (no tax added on top)