Hello Ankur and Kunal,
PF my reply below
Part-1
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OFBiz does allow you to apply taxes on products{items}. You need to mention
the type of tax you want to apply trough tax authorities, however for VAT
tax you have to apply a tweak.
Technically there can be three ways in which various government taxes could
be applied
1) Tax Directly on the final cost of the product {This could be CVD
...Sales Tax etc.}
2) Tax Applied on SUM of (Cost Price + Taxes) i.e. on Total Price. ..
3) Tax applied only on the {total tax applicable on the product}.--- {this
could be education cess or something like that}
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Part-2
Now Consider two scenarios of applying VAT {since India has this mixed-up
system}
Case-1: Product sale by Manufacturing Company Directly via its own store
Say u manufacture a tipper A having sell price of SP
Now upon {selling} transferring this product inter-state you may have to pay
taxes like CST {16.48%} and other taxes. Lets say these taxes cumulatively
as x%{say 16.48 CST}
Then upon {SP + X% SP} you apply VAT of say 4% to get your effective total
Thus the equation is:
{SP + 16.48% * SP}4% = Total
Therefore Tot = SP{1 + 16.48%}4%
= SP{1 + 0.1648}0.04
= SP{0.046592}
So you effectively configure a single tax on the higher side which is
combination of the taxes.
Case -2 You are a Distributor/Retailer Channel Partner
You should enter the price of the Product the you purchased from the
manufacturer as complete price including VAT. So now your purchase price of
product is VAT included.
Now you can configure to apply simple tax of 4% {name it VAT} this tax will
get applied on the item that you are selling to the End-user at a Selling
Price of {Purchase Price + Margin}.
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Part-2 is about how to apply VAT using existing functionality
Part-1 is about what a Taxation Engine should have {Flexibility to apply
and configure the taxes in above 3 mentioned ways .......as our government
policies are dynamic}
Hope this helps
Sorry for delayed reply......{little busy}
Cheers
Vijay
