In some states, like Delhi, VAT is calculated on the item rate.
To configure VAT on item rate
1. Go to F11: Features > F3: Statutory & Taxation .
2. Enable Set/alter tax/rate details .
3. Select the State.
4. Set Enable VAT on stock item rate to Yes .
1. Go to Inventory info > Stock items > Create/Alter .
2. Enable Set/alter VAT details .
3. Select On item rate as the Calculation type .
4. Specify the rate slabs and the tax rate for each slab.