This thing is followed countless times everyday in Pakistan, limit is upon imagination, and THIS STILL WORKS here.

Simply because you have to maintain the record,...

Now i am going to work on this, & do some testing. I would have to setup a new instance.

In the end i want to thank everyone specially @boxygen for generous advice and working. Kudos :-)

Practically and Logically if a Manufacturer (ABC) sells a Candy to a Non Registered Retailer (Xehroz) @ Rs. 70 then then invoice shall reflect as below

Inventory                  70
       GRN Account                      70

GRN Account            70
17% Tax                  11.9
3%   AT                    2.1
2%   ET                    1.4
            Payable                          85.40

But What I am understanding that even the ABC Supplier is Invoicing at 70, but he is applying All Taxes on MRP i.e. 100. Is that Right? as below

Inventory                  70
       GRN Account                      70

GRN Account            70
17% Tax                  17
3%   AT                    3
2%   ET                    2
            Payable                          92

IN that case wouldn't your Input Tax will always be Equal to Output Tax? If true, then is it necessary to do all this accounting of Taxes as Retailer? Simply you can record all your purchases @ 92 and record all your sales @ 122 and your Rs. 30 Profit will be there and you have no Tax Liabilities. Any way I raised this point just to understand your need to Record all taxes.

Now lets come to your problem. If any way you need to record all Purchase Taxes on MRP then we will have to modify FA Purchases to link it to the MRP. MRP can be defined as a Sales Type Retail in FA and can be used for calculating Tax Purchases.

It will have no Adverse impact on Input and Output Tax working. It will show something like THIS

Retailer shall always sell the product on MRP. 100 was taken for simplicity. It can be any number but it shall be MRP.

And your all taxes apply on MRP.

As a retailer the case will be very similar to Registered Buyer invoice for candy and non candy.

And this solution is without any hack.

Therefore, it is requested to elaborate your previous solution in detail. 

A little modification in the Invoice Write() function to link the Tax Calculations to MRP instead of Resulting Net Price can achieve this.

Where as i want it to pick up 85 + 17 = 102

I mean the value of tax i fix. Is this thing still going to work????

Case 2: Non Registered Non Candy

Case 3: Registered Buyer with Candy

Case 4: Registered Buyer with Non Candy

Is this exactly what you want?

I have seen your file it is exactly what i wrote earlier, only difference is that you tabulated that in a more recognizable format. The reason i didn't mentioned the detailed accounting was that these are obvious standards anywhere in world, i just jumped directly to the point.

But the question still remains HOW to do this in FA, as i mentioned earlier, do we have to just add a custom field in product file or what??

Please elaborate your solution to this.

First situation
The Manufacturer sell this to it's registered customer (In this step to a Retailer) at following rate
90+17+2=109
90 Goes into COGS account for that product
17 goes to Sales Tax Account for that product (this can be passed on / Claimable)
2 goes to "Extra Tax" account for that product (this can also be passed on further to next customer  / Claimable)

Question # 1: Are we trying to setup this Tax System for the Manufacturer or Distributor or Retailer? I am assuming we are doing this for Manufacturer.

Understanding # 1: MRP = 100 and all Taxes are being applied on MRP on each intermediary selling steps (irrespective of the selling price at each step ** ) till it reach End Consumer. Right?

** for e.g. This Candy's Manufactured Cost could be 70. It was the sold to the Retailer at 90 but the taxes are applied keeping MRP as a base.

Objection # 1: If Manufacturer is selling at 90+17+2 then 90 Can be the Purchase Price of Retailer but it can't be the COGS for Manufacturer. The COGS can be 70 as mentioned above.

This situation is similar accept the Retailer is Unregistered so he is penalized extra 3%. This 3% is an Output Tax for Manufacturer but Not an Input Tax for the Retailer.

Extra Tax 2% is related directly to the Item Type not the Buyer Type.

Let us first digest the Sales Side then we will discuss the procurement side.

Comment: Normally in Distribution Setup Where MRP is always the Base, the Selling Price to Retailer is also defined as a discounted MRP price. But you didn't mentioned that. If this is possible then it will be much easier to implement this within the current Tax System of FA with small modification.

You didn't mentioned the Fixed Value Rate handling mentioned in This Doc

I have create an online sheet. Please check Click Here

It is complicated but I'll come with another simple to understand example.
Let's assume one product called "Super Candy" is sold to consumers at PKR 119
Breaking of this is (100 as MRP + 17 ST + 2 ET)

First situation
The Manufacturer sell this to it's registered customer (In this step to a Retailer) at following rate
90+17+2=109
90 Goes into COGS account for that product
17 goes to Sales Tax Account for that product (this can be passed on / Claimable)
2 goes to "Extra Tax" account for that product (this can also be passed on further to next customer  / Claimable)

Second situation
The Manufacturer sell this to it's Un-registered customer (In this step to a Retailer) at following rate
90+17+3+2=112
90 Goes into COGS account for that product
17 goes to Sales Tax Account for that product (this can be passed on  / Claimable)
3 goes to "Additional Sales Tax" for that product (THIS CAN-NOT BE PASSED ON FURTHER / non-claimable)
2 goes to "Extra Tax" account for that product (this can also be passed on further to next customer / Claimable)

FYI Passed on or claimable means that this amount of tax can be claimed while filing monthly sales tax returns and the customer may get a rebate / refund / adjustments subject to other things, it is can be adjusted in your tax return. Pass-on means the same in terms of "SALES" i.e. you can ask your customer "By law govt. has collected tax on this from me through my supplier and i am passing on this load to you as per law". Additional tax cannot be passed-on if some registered retailer is charged with this, this would be his EXPENSE he would have to bear this.

THIS was all from "Sales" point of view.

From procurement side it is the same as sales, you log the difference in cost and sale price into profit and difference of ST, ET is also logged and difference is paid accordingly to govt. only additional tax is recorded as expense.

The only impact in this case would be upon "Un-Registered" retailer or distributor, i.e. when he makes a purchase he would be charged additional 3% tax, but he CANNOT pass-on this to his customer, for example the consumer will pay only 17% of MRP + 2% Extra Tax. This thing was introduced to encourage registration (in other words documentation and traceability) and discourage un-regulated trade. 

Yes according to law toffees etc. are always charged a tax called "Extra Tax" which is @2%

We have to log all these separately and would have to display/produce this record separately.

I hope this will develop common understanding. and i wish nothing is left.

Shehroz

But this is quite interesting and I would like to understand it first. Based on your two documents can you please state some examples with Basic values for each type of Item category and tax category. I want to see the complex formulae that are being applied in any single case.

for e.g. Item A Cost = 90, MRP is 100, Tax is 17%, Additional is 3%, Extra is 2% then What GL Transactions shall be recorded when this Item is sold and What OutPut Tax accounts are Credited.

Also the impact of Item A for each type of Registered, Unregistered and End Consumer.

If Item A is defined to be confectionary item then it will always be added 2%?

I am also planning to implement this according to Pakistani law and standards, but it is not working.

I am not sure that i would go for some kind of proprietary and paid services, definitely i am here for some community FOSS solution.

https://github.com/xehroz/SaleWise/blob/master/PAKISTAN%20SALES%20TAX%20REGIME.pdf

&

https://ibb.co/NmLCXNW

In my case i am talking about real physical products which falls in "Goods regime"