Tax Structure setup will be used to define the methodology of calculating taxes which we have received from customers and then pay them to government.


Other types of charges that may apply to your invoices (like shipping, freight, package & forwarding and insurance, etc.) can also be configured as tax charges. These lists need to be defined in charge master.

Go to Home > Account > Setup > Tax Charge

For example: We can create Purchase VAT and Sales VAT in the Charge master form.

This charge Item will be getting loads in a purchase order, purchase invoice, sales order, and sales invoice documents to select,
In the transaction document you have to give % (example 5%) of the Purchase VAT or Sales VAT and also have to select the appropriate ledger account to post the value for further Tax computations.

Also, we can create Tax Structure like below, then the user need not to give input manually means once you have made the tax setup then the structure will be loaded with all the transaction documents.

To create a new Tax Structure navigate to Accounts > Setup >Tax Structure


While creating new Structure, you need to add predefined tax charges and need to specify their calculation method.


In every row we need to mention,


the Tax Charge: Need to select from the predefined list.

Calculation Type:

  1. Percentage: mentioned charge will calculated on calculation value as percentage.
  2. Fixed Amount: direct value will added for the tax charge without any calculation
  3. Amount per Quantity: no of quantity mentioned in invoice(s) will get multiplied with calculation value.


Calculation Value: value for calculating charge

Include Accessible value: whether to include accessible value for the calculation of charge.


Calculation on which row: You can apply taxes on previous row tax charge amount. For using this option we need to mention the particular tax charge row no. If we need to do on more than one tax charge row then we need to specify as 1+2+3 (1, 2, 3 are the row no’s).


Ledger Account: Specify the account ledger on which this tax charges to be posted.