How to calculate VAT on stock item rate?

Enter the VAT rate in stock item master. In the invoice use common purchase/sales ledger and VAT ledger. VAT gets calculated on the rate defined in stock item.

To calculate VAT on Item rate,

1.    Create a stock Item at specific VAT rate

2.    Create a common purchase or sales ledger.

3.    Create a common VAT ledger.

4.    Record a transaction (purchase or sales) using the stock items whose VAT rates are specified at the stock item masters. The VAT amount will be calculated on VAT rates defined in stock item.