fix!: tax net_amount and not_applicable (#54687)

erpnext/accounts/doctype/advance_taxes_and_charges/advance_taxes_and_charges.json

@@ -94,11 +94,11 @@
    "fieldtype": "Column Break"
   },
   {
-    "allow_on_submit": 1,
+   "allow_on_submit": 1,
-    "fieldname": "project",
+   "fieldname": "project",
-    "fieldtype": "Link",
+   "fieldtype": "Link",
-    "label": "Project",
+   "label": "Project",
-    "options": "Project"
+   "options": "Project"
   },
   {
    "fieldname": "section_break_8",
@@ -187,12 +187,14 @@
  "index_web_pages_for_search": 1,
  "istable": 1,
  "links": [],
- "modified": "2021-11-25 11:10:10.945027",
+ "modified": "2026-05-01 00:38:53.368737",
  "modified_by": "Administrator",
  "module": "Accounts",
  "name": "Advance Taxes and Charges",
  "owner": "Administrator",
  "permissions": [],
+ "row_format": "Dynamic",
  "sort_field": "modified",
- "sort_order": "ASC"
+ "sort_order": "ASC",
-}
+ "states": []
+}

erpnext/accounts/doctype/advance_taxes_and_charges/advance_taxes_and_charges.py

@@ -30,6 +30,7 @@ class AdvanceTaxesandCharges(Document):
 		parent: DF.Data
 		parentfield: DF.Data
 		parenttype: DF.Data
+		project: DF.Link | None
 		rate: DF.Float
 		row_id: DF.Data | None
 		tax_amount: DF.Currency

erpnext/accounts/doctype/item_tax_template/item_tax_template.js

@@ -47,3 +47,12 @@ frappe.ui.form.on("Item Tax Template", {
 		});
 	},
 });
+
+frappe.ui.form.on("Item Tax Template Detail", {
+	not_applicable: function (frm, cdt, cdn) {
+		let row = locals[cdt][cdn];
+		if (row.not_applicable) {
+			frappe.model.set_value(cdt, cdn, "tax_rate", 0);
+		}
+	},
+});

erpnext/accounts/doctype/item_tax_template/item_tax_template.py

@@ -27,8 +27,15 @@ class ItemTaxTemplate(Document):
 	# end: auto-generated types
 
 	def validate(self):
+		self.set_zero_rate_for_not_applicable_tax()
 		self.validate_tax_accounts()
 
+	def set_zero_rate_for_not_applicable_tax(self):
+		"""Ensure tax_rate is 0 for any row marked as not applicable."""
+		for row in self.get("taxes"):
+			if row.not_applicable:
+				row.tax_rate = 0
+
 	def autoname(self):
 		if self.company and self.title:
 			abbr = frappe.get_cached_value("Company", self.company, "abbr")

erpnext/accounts/doctype/item_tax_template_detail/item_tax_template_detail.json

@@ -6,7 +6,8 @@
  "engine": "InnoDB",
  "field_order": [
   "tax_type",
-  "tax_rate"
+  "tax_rate",
+  "not_applicable"
  ],
  "fields": [
   {
@@ -21,12 +22,21 @@
    "fieldname": "tax_rate",
    "fieldtype": "Float",
    "in_list_view": 1,
-   "label": "Tax Rate"
+   "label": "Tax Rate",
+   "read_only_depends_on": "eval:doc.not_applicable"
+  },
+  {
+   "default": "0",
+   "description": "Check if this tax is not applicable to items (distinct from 0% rate)",
+   "fieldname": "not_applicable",
+   "fieldtype": "Check",
+   "in_list_view": 1,
+   "label": "Not Applicable"
   }
  ],
  "istable": 1,
  "links": [],
- "modified": "2026-04-30 23:49:27.020639",
+ "modified": "2026-04-30 23:59:22.020639",
  "modified_by": "Administrator",
  "module": "Accounts",
  "name": "Item Tax Template Detail",

erpnext/accounts/doctype/item_tax_template_detail/item_tax_template_detail.py

@@ -14,6 +14,7 @@ class ItemTaxTemplateDetail(Document):
 	if TYPE_CHECKING:
 		from frappe.types import DF
 
+		not_applicable: DF.Check
 		parent: DF.Data
 		parentfield: DF.Data
 		parenttype: DF.Data

erpnext/accounts/doctype/purchase_taxes_and_charges/purchase_taxes_and_charges.json

@@ -25,10 +25,12 @@
   "project",
   "section_break_9",
   "account_currency",
+  "net_amount",
   "tax_amount",
   "tax_amount_after_discount_amount",
   "total",
   "column_break_14",
+  "base_net_amount",
   "base_tax_amount",
   "base_total",
   "base_tax_amount_after_discount_amount",
@@ -213,11 +215,11 @@
    "fieldtype": "Column Break"
   },
   {
-    "allow_on_submit": 1,
+   "allow_on_submit": 1,
-    "fieldname": "project",
+   "fieldname": "project",
-    "fieldtype": "Link",
+   "fieldtype": "Link",
-    "label": "Project",
+   "label": "Project",
-    "options": "Project"
+   "options": "Project"
   },
   {
    "default": "0",
@@ -241,20 +243,38 @@
    "fieldtype": "Check",
    "label": "Is Tax Withholding Account",
    "read_only": 1
+  },
+  {
+   "description": "Basis for tax calculation",
+   "fieldname": "net_amount",
+   "fieldtype": "Currency",
+   "label": "Net Amount",
+   "options": "currency",
+   "read_only": 1
+  },
+  {
+   "description": "Basis for tax calculation",
+   "fieldname": "base_net_amount",
+   "fieldtype": "Currency",
+   "label": "Net Amount (Company Currency)",
+   "options": "Company:company:default_currency",
+   "read_only": 1
   }
  ],
  "grid_page_length": 50,
  "idx": 1,
  "istable": 1,
  "links": [],
- "modified": "2025-04-15 13:14:48.936047",
+ "modified": "2026-05-01 00:38:29.543523",
  "modified_by": "Administrator",
  "module": "Accounts",
  "name": "Purchase Taxes and Charges",
  "naming_rule": "Random",
  "owner": "Administrator",
  "permissions": [],
+ "row_format": "Dynamic",
  "sort_field": "modified",
  "sort_order": "DESC",
+ "states": [],
  "track_changes": 1
-}
+}

erpnext/accounts/doctype/purchase_taxes_and_charges/purchase_taxes_and_charges.py

@@ -17,6 +17,7 @@ class PurchaseTaxesandCharges(Document):
 		account_currency: DF.Link | None
 		account_head: DF.Link
 		add_deduct_tax: DF.Literal["Add", "Deduct"]
+		base_net_amount: DF.Currency
 		base_tax_amount: DF.Currency
 		base_tax_amount_after_discount_amount: DF.Currency
 		base_total: DF.Currency
@@ -35,9 +36,11 @@ class PurchaseTaxesandCharges(Document):
 		included_in_print_rate: DF.Check
 		is_tax_withholding_account: DF.Check
 		item_wise_tax_detail: DF.Code | None
+		net_amount: DF.Currency
 		parent: DF.Data
 		parentfield: DF.Data
 		parenttype: DF.Data
+		project: DF.Link | None
 		rate: DF.Float
 		row_id: DF.Data | None
 		tax_amount: DF.Currency

erpnext/accounts/doctype/sales_taxes_and_charges/sales_taxes_and_charges.json

@@ -21,10 +21,12 @@
   "rate",
   "section_break_9",
   "account_currency",
+  "net_amount",
   "tax_amount",
   "total",
   "tax_amount_after_discount_amount",
   "column_break_13",
+  "base_net_amount",
   "base_tax_amount",
   "base_total",
   "base_tax_amount_after_discount_amount",
@@ -190,11 +192,11 @@
    "fieldtype": "Column Break"
   },
   {
-    "allow_on_submit": 1,
+   "allow_on_submit": 1,
-    "fieldname": "project",
+   "fieldname": "project",
-    "fieldtype": "Link",
+   "fieldtype": "Link",
-    "label": "Project",
+   "label": "Project",
-    "options": "Project"
+   "options": "Project"
   },
   {
    "default": "0",
@@ -220,19 +222,36 @@
    "label": "Account Currency",
    "options": "Currency",
    "read_only": 1
+  },
+  {
+   "description": "Basis for tax calculation",
+   "fieldname": "net_amount",
+   "fieldtype": "Currency",
+   "label": "Net Amount",
+   "options": "currency",
+   "read_only": 1
+  },
+  {
+   "description": "Basis for tax calculation",
+   "fieldname": "base_net_amount",
+   "fieldtype": "Currency",
+   "label": "Net Amount (Company Currency)",
+   "options": "Company:company:default_currency",
+   "read_only": 1
   }
  ],
  "idx": 1,
  "index_web_pages_for_search": 1,
  "istable": 1,
  "links": [],
- "modified": "2024-01-14 10:08:17.776528",
+ "modified": "2026-05-01 00:37:57.880071",
  "modified_by": "Administrator",
  "module": "Accounts",
  "name": "Sales Taxes and Charges",
  "owner": "Administrator",
  "permissions": [],
+ "row_format": "Dynamic",
  "sort_field": "modified",
  "sort_order": "ASC",
  "states": []
-}
+}

erpnext/accounts/doctype/sales_taxes_and_charges/sales_taxes_and_charges.py

@@ -16,6 +16,7 @@ class SalesTaxesandCharges(Document):
 
 		account_currency: DF.Link | None
 		account_head: DF.Link
+		base_net_amount: DF.Currency
 		base_tax_amount: DF.Currency
 		base_tax_amount_after_discount_amount: DF.Currency
 		base_total: DF.Currency
@@ -33,9 +34,11 @@ class SalesTaxesandCharges(Document):
 		included_in_paid_amount: DF.Check
 		included_in_print_rate: DF.Check
 		item_wise_tax_detail: DF.Code | None
+		net_amount: DF.Currency
 		parent: DF.Data
 		parentfield: DF.Data
 		parenttype: DF.Data
+		project: DF.Link | None
 		rate: DF.Float
 		row_id: DF.Data | None
 		tax_amount: DF.Currency

erpnext/controllers/accounts_controller.py

@@ -67,6 +67,7 @@ from erpnext.setup.utils import get_exchange_rate
 from erpnext.stock.doctype.item.item import get_uom_conv_factor
 from erpnext.stock.doctype.packed_item.packed_item import make_packing_list
 from erpnext.stock.get_item_details import (
+	NOT_APPLICABLE_TAX,
 	_get_item_tax_template,
 	_get_item_tax_template_from_item_group,
 	get_bin_details,
@@ -1294,7 +1295,10 @@ class AccountsController(TransactionBase):
 			if isinstance(item_tax_rate, str):
 				item_tax_rate = parse_json(item_tax_rate)
 
-			for account_head, _rate in item_tax_rate.items():
+			for account_head, rate in item_tax_rate.items():
+				if rate == NOT_APPLICABLE_TAX:
+					continue
+
 				row = self.get_tax_row(account_head)
 
 				if not row:
@@ -3721,8 +3725,11 @@ def add_taxes_from_tax_template(child_item, parent_doc, db_insert=True):
 
 	if child_item.get("item_tax_rate") and add_taxes_from_item_tax_template:
 		tax_map = json.loads(child_item.get("item_tax_rate"))
-		for tax_type in tax_map:
+		for tax_type, tax_rate in tax_map.items():
-			tax_rate = flt(tax_map[tax_type])
+			if tax_rate == NOT_APPLICABLE_TAX:
+				continue
+
+			tax_rate = flt(tax_rate)
 			taxes = parent_doc.get("taxes") or []
 			# add new row for tax head only if missing
 			found = any(tax.account_head == tax_type for tax in taxes)

erpnext/controllers/taxes_and_totals.py

@@ -19,7 +19,11 @@ from erpnext.controllers.accounts_controller import (
 	validate_inclusive_tax,
 	validate_taxes_and_charges,
 )
-from erpnext.stock.get_item_details import _get_item_tax_template, get_item_tax_map
+from erpnext.stock.get_item_details import (
+	NOT_APPLICABLE_TAX,
+	_get_item_tax_template,
+	get_item_tax_map,
+)
 from erpnext.utilities.regional import temporary_flag
 
 
@@ -275,6 +279,7 @@ class calculate_taxes_and_totals:
 				tax.item_wise_tax_detail = {}
 
 			tax_fields = [
+				"net_amount",
 				"total",
 				"tax_amount_after_discount_amount",
 				"tax_amount_for_current_item",
@@ -345,6 +350,9 @@ class calculate_taxes_and_totals:
 		if cint(tax.included_in_print_rate):
 			tax_rate = self._get_tax_rate(tax, item_tax_map)
 
+			if tax_rate == NOT_APPLICABLE_TAX:
+				return tax_slope, tax_intercept
+
 			if tax.charge_type == "On Net Total":
 				tax_slope = tax_rate / 100.0
 
@@ -376,9 +384,12 @@ class calculate_taxes_and_totals:
 
 	def _get_tax_rate(self, tax, item_tax_map):
 		if tax.account_head in item_tax_map:
-			return flt(item_tax_map.get(tax.account_head), self.doc.precision("rate", tax))
+			rate = item_tax_map[tax.account_head]
-		else:
+			if rate == NOT_APPLICABLE_TAX:
-			return tax.rate
+				return NOT_APPLICABLE_TAX
+			return flt(rate, self.doc.precision("rate", tax))
+
+		return tax.rate
 
 	def calculate_net_total(self):
 		self.doc.total_qty = (
@@ -426,9 +437,12 @@ class calculate_taxes_and_totals:
 			item_tax_map = self._load_item_tax_rate(item.item_tax_rate)
 			for i, tax in enumerate(doc.taxes):
 				# tax_amount represents the amount of tax for the current step
-				current_tax_amount = self.get_current_tax_amount(item, tax, item_tax_map)
+				current_net_amount, current_tax_amount = self.get_current_tax_and_net_amount(
+					item, tax, item_tax_map
+				)
 				if frappe.flags.round_row_wise_tax:
 					current_tax_amount = flt(current_tax_amount, tax.precision("tax_amount"))
+					current_net_amount = flt(current_net_amount, tax.precision("net_amount"))
 
 				# Adjust divisional loss to the last item
 				if tax.charge_type == "Actual":
@@ -436,6 +450,10 @@ class calculate_taxes_and_totals:
 					if n == len(self._items) - 1:
 						current_tax_amount += actual_tax_dict[tax.idx]
 
+				# net_amount is the taxable basis, it feeds no total and is always
+				# accumulated, unlike tax_amount which is kept from the first pass
+				tax.net_amount += current_net_amount
+
 				# accumulate tax amount into tax.tax_amount
 				if tax.charge_type != "Actual" and not (
 					self.discount_amount_applied and self.doc.apply_discount_on == "Grand Total"
@@ -486,7 +504,9 @@ class calculate_taxes_and_totals:
 
 		for i, tax in enumerate(doc.taxes):
 			self.round_off_totals(tax)
-			self._set_in_company_currency(tax, ["tax_amount", "tax_amount_after_discount_amount"])
+			self._set_in_company_currency(
+				tax, ["tax_amount", "tax_amount_after_discount_amount", "net_amount"]
+			)
 
 			self.round_off_base_values(tax)
 			self.set_cumulative_total(i, tax)
@@ -517,8 +537,17 @@ class calculate_taxes_and_totals:
 			tax.total = flt(self.doc.get("taxes")[row_idx - 1].total + tax_amount, tax.precision("total"))
 
 	def get_current_tax_amount(self, item, tax, item_tax_map):
+		# kept for backwards compatibility with callers outside this module
+		_, current_tax_amount = self.get_current_tax_and_net_amount(item, tax, item_tax_map)
+		return current_tax_amount
+
+	def get_current_tax_and_net_amount(self, item, tax, item_tax_map):
 		tax_rate = self._get_tax_rate(tax, item_tax_map)
 		current_tax_amount = 0.0
+		current_net_amount = 0.0
+
+		if tax_rate == NOT_APPLICABLE_TAX:
+			return current_net_amount, current_tax_amount
 
 		if tax.charge_type == "Actual":
 			# distribute the tax amount proportionally to each item row
@@ -528,23 +557,25 @@ class calculate_taxes_and_totals:
 				if not item.get("apply_tds") or not self.doc.tax_withholding_net_total:
 					current_tax_amount = 0.0
 				else:
-					current_tax_amount = item.net_amount * actual / self.doc.tax_withholding_net_total
+					current_net_amount = item.net_amount
+					current_tax_amount = current_net_amount * actual / self.doc.tax_withholding_net_total
 			else:
+				current_net_amount = item.net_amount
 				current_tax_amount = (
-					item.net_amount * actual / self.doc.net_total if self.doc.net_total else 0.0
+					current_net_amount * actual / self.doc.net_total if self.doc.net_total else 0.0
 				)
 
 		elif tax.charge_type == "On Net Total":
+			current_net_amount = item.net_amount
 			current_tax_amount = (tax_rate / 100.0) * item.net_amount
 		elif tax.charge_type == "On Previous Row Amount":
-			current_tax_amount = (tax_rate / 100.0) * self.doc.get("taxes")[
+			current_net_amount = self.doc.get("taxes")[cint(tax.row_id) - 1].tax_amount_for_current_item
-				cint(tax.row_id) - 1
+			current_tax_amount = (tax_rate / 100.0) * current_net_amount
-			].tax_amount_for_current_item
 		elif tax.charge_type == "On Previous Row Total":
-			current_tax_amount = (tax_rate / 100.0) * self.doc.get("taxes")[
+			current_net_amount = self.doc.get("taxes")[cint(tax.row_id) - 1].grand_total_for_current_item
-				cint(tax.row_id) - 1
+			current_tax_amount = (tax_rate / 100.0) * current_net_amount
-			].grand_total_for_current_item
 		elif tax.charge_type == "On Item Quantity":
+			# don't sum current net amount: net_amount field is currency-denominated
 			current_tax_amount = tax_rate * item.qty
 		else:
 			# Custom charge_type: rate applies to the resolver-provided base.
@@ -553,7 +584,7 @@ class calculate_taxes_and_totals:
 		if not (self.doc.get("is_consolidated") or tax.get("dont_recompute_tax")):
 			self.set_item_wise_tax(item, tax, tax_rate, current_tax_amount)
 
-		return current_tax_amount
+		return current_net_amount, current_tax_amount
 
 	def get_item_taxable_base(self, item, tax):
 		"""Per-item base a custom charge_type's rate is applied to.

erpnext/controllers/tests/test_taxes_and_totals.py

@@ -158,3 +158,141 @@ class TestTaxesAndTotals(FrappeTestCase):
 		self.assertEqual(so.rounding_adjustment, 0)
 		self.assertEqual(so.base_rounded_total, 0)
 		self.assertEqual(so.base_rounding_adjustment, 0)
+
+	def test_tax_net_amount_with_not_applicable_item_tax(self):
+		"""Each tax row records only the net of the items it actually applies to.
+
+		Two items of 100 each, one per template. Template A applies VAT 7 and
+		marks VAT 19 not applicable, template B does the reverse. Both tax rows
+		must report a net_amount of 100, not the full net total of 200.
+		"""
+		vat_7 = "_Test Account VAT - _TC"
+		vat_19 = "_Test Account Service Tax - _TC"
+
+		templates = {}
+		for title, rows in {
+			"_Test NA Template A": [(vat_7, 7, 0), (vat_19, 0, 1)],
+			"_Test NA Template B": [(vat_7, 0, 1), (vat_19, 19, 0)],
+		}.items():
+			doc = frappe.new_doc("Item Tax Template")
+			doc.title = title
+			doc.company = "_Test Company"
+			for tax_type, tax_rate, not_applicable in rows:
+				doc.append(
+					"taxes",
+					{"tax_type": tax_type, "tax_rate": tax_rate, "not_applicable": not_applicable},
+				)
+			templates[title] = doc.insert().name
+
+		so = make_sales_order(do_not_save=True)
+		so.items = []
+		for title in templates:
+			so.append(
+				"items",
+				{
+					"item_code": "_Test Item",
+					"qty": 1,
+					"rate": 100,
+					"warehouse": "_Test Warehouse - _TC",
+					"item_tax_template": templates[title],
+				},
+			)
+
+		so.set("taxes", [])
+		for account_head in (vat_7, vat_19):
+			so.append(
+				"taxes",
+				{
+					"charge_type": "On Net Total",
+					"account_head": account_head,
+					"description": account_head,
+					"rate": 0,
+					"cost_center": "_Test Cost Center - _TC",
+				},
+			)
+
+		so.save()
+
+		self.assertEqual(so.net_total, 200.0)
+		self.assertEqual(so.taxes[0].net_amount, 100.0)
+		self.assertEqual(so.taxes[0].tax_amount, 7.0)
+		self.assertEqual(so.taxes[1].net_amount, 100.0)
+		self.assertEqual(so.taxes[1].tax_amount, 19.0)
+
+	def test_inclusive_tax_with_not_applicable_item_tax(self):
+		"""An inclusive tax row meeting an item that marks it not applicable must
+		contribute no fraction, instead of raising in get_current_tax_fraction."""
+		vat_19 = "_Test Account Service Tax - _TC"
+
+		template = frappe.new_doc("Item Tax Template")
+		template.title = "_Test NA Template Inclusive"
+		template.company = "_Test Company"
+		template.append("taxes", {"tax_type": vat_19, "tax_rate": 0, "not_applicable": 1})
+		template.insert()
+
+		so = make_sales_order(do_not_save=True)
+		so.items = []
+		so.append(
+			"items",
+			{
+				"item_code": "_Test Item",
+				"qty": 1,
+				"rate": 119,
+				"warehouse": "_Test Warehouse - _TC",
+				"item_tax_template": template.name,
+			},
+		)
+		so.set("taxes", [])
+		so.append(
+			"taxes",
+			{
+				"charge_type": "On Net Total",
+				"account_head": vat_19,
+				"description": vat_19,
+				"rate": 19,
+				"included_in_print_rate": 1,
+				"cost_center": "_Test Cost Center - _TC",
+			},
+		)
+
+		so.save()
+
+		# the tax does not apply, so nothing is backed out of the printed rate
+		self.assertEqual(so.net_total, 119.0)
+		self.assertEqual(so.taxes[0].tax_amount, 0.0)
+		self.assertEqual(so.taxes[0].net_amount, 0.0)
+		self.assertEqual(so.grand_total, 119.0)
+
+	def test_tax_net_amount_survives_grand_total_discount(self):
+		"""A discount on Grand Total re-runs the calculation with
+		discount_amount_applied set. net_amount is reset on that second pass, so
+		it has to be accumulated there too instead of being left at zero."""
+		so = make_sales_order(do_not_save=True)
+		so.items = []
+		so.append(
+			"items",
+			{
+				"item_code": "_Test Item",
+				"qty": 10,
+				"rate": 100,
+				"warehouse": "_Test Warehouse - _TC",
+			},
+		)
+		so.set("taxes", [])
+		so.append(
+			"taxes",
+			{
+				"charge_type": "On Net Total",
+				"account_head": "_Test Account VAT - _TC",
+				"description": "VAT",
+				"rate": 19,
+				"cost_center": "_Test Cost Center - _TC",
+			},
+		)
+		so.apply_discount_on = "Grand Total"
+		so.discount_amount = 100
+
+		calculate_taxes_and_totals(so)
+
+		self.assertEqual(so.taxes[0].net_amount, so.net_total)
+		self.assertEqual(so.grand_total, 1090.0)

erpnext/public/js/controllers/taxes_and_totals.js

@@ -1,6 +1,9 @@
 // Copyright (c) 2015, Frappe Technologies Pvt. Ltd. and Contributors
 // License: GNU General Public License v3. See license.txt
 
+// mirror of erpnext.stock.get_item_details.NOT_APPLICABLE_TAX
+erpnext.NOT_APPLICABLE_TAX = "N/A";
+
 // Per-charge_type base resolvers, mirror of the `erpnext_taxable_base_resolvers`
 // server hook. A localization registers `fn(calc, item, tax)` returning the per-item
 // base, so the client preview matches the server for custom charge types.
@@ -300,6 +303,10 @@ erpnext.taxes_and_totals = class TaxesAndTotals extends erpnext.payments {
 		if(cint(tax.included_in_print_rate)) {
 			var tax_rate = this._get_tax_rate(tax, item_tax_map);
 
+			if (tax_rate === erpnext.NOT_APPLICABLE_TAX) {
+				return [tax_slope, tax_intercept];
+			}
+
 			if(tax.charge_type == "On Net Total") {
 				tax_slope = (tax_rate / 100.0);
 
@@ -339,8 +346,14 @@ erpnext.taxes_and_totals = class TaxesAndTotals extends erpnext.payments {
 	}
 
 	_get_tax_rate(tax, item_tax_map) {
-		return (Object.keys(item_tax_map).indexOf(tax.account_head) != -1) ?
+		if (tax.account_head in item_tax_map) {
-			flt(item_tax_map[tax.account_head], precision("rate", tax)) : tax.rate;
+			let rate = item_tax_map[tax.account_head];
+			if (rate === erpnext.NOT_APPLICABLE_TAX) {
+				return erpnext.NOT_APPLICABLE_TAX;
+			}
+			return flt(rate, precision("rate", tax));
+		}
+		return tax.rate;
 	}
 
 	calculate_net_total() {
@@ -379,6 +392,9 @@ erpnext.taxes_and_totals = class TaxesAndTotals extends erpnext.payments {
 			}
 
 			$.each(item_tax_map, function(tax, rate) {
+				if (rate === erpnext.NOT_APPLICABLE_TAX) {
+					return;
+				}
 				let found = (me.frm.doc.taxes || []).find(d => d.account_head === tax);
 				if (!found) {
 					let child = frappe.model.add_child(me.frm.doc, "taxes");
@@ -429,11 +445,14 @@ erpnext.taxes_and_totals = class TaxesAndTotals extends erpnext.payments {
 					}
 				}
 
+				// net_amount is the taxable basis, it feeds no total and is always
+				// accumulated, unlike tax_amount which is kept from the first pass
+				tax.net_amount += current_net_amount;
+
 				// accumulate tax amount into tax.tax_amount
 				if (tax.charge_type != "Actual" &&
 					!(me.discount_amount_applied && me.frm.doc.apply_discount_on=="Grand Total")) {
 					tax.tax_amount += current_tax_amount;
-					tax.net_amount += current_net_amount;
 				}
 
 				// store tax_amount for current item as it will be used for
@@ -519,6 +538,10 @@ erpnext.taxes_and_totals = class TaxesAndTotals extends erpnext.payments {
 		var current_tax_amount = 0.0;
 		var current_net_amount = 0.0;
 
+		if (tax_rate === erpnext.NOT_APPLICABLE_TAX) {
+			return [current_net_amount, current_tax_amount];
+		}
+
 		// To set row_id by default as previous row.
 		if(["On Previous Row Amount", "On Previous Row Total"].includes(tax.charge_type)) {
 			if (tax.idx === 1) {

erpnext/public/js/controllers/transaction.js

@@ -818,6 +818,9 @@ erpnext.TransactionController = class TransactionController extends erpnext.taxe
 			}
 
 			$.each(item_tax_map, function(tax, rate) {
+				if (rate === erpnext.NOT_APPLICABLE_TAX) {
+					return;
+				}
 				let found = (me.frm.doc.taxes || []).find(d => d.account_head === tax);
 				if(!found) {
 					let child = frappe.model.add_child(me.frm.doc, "taxes");
@@ -1611,9 +1614,9 @@ erpnext.TransactionController = class TransactionController extends erpnext.taxe
 		}
 
 		if (this.frm.doc.taxes && this.frm.doc.taxes.length > 0) {
-			this.frm.set_currency_labels(["tax_amount", "total", "tax_amount_after_discount"], this.frm.doc.currency, "taxes");
+			this.frm.set_currency_labels(["net_amount", "tax_amount", "total", "tax_amount_after_discount"], this.frm.doc.currency, "taxes");
 
-			this.frm.set_currency_labels(["base_tax_amount", "base_total", "base_tax_amount_after_discount"], company_currency, "taxes");
+			this.frm.set_currency_labels(["base_net_amount", "base_tax_amount", "base_total", "base_tax_amount_after_discount"], company_currency, "taxes");
 		}
 
 		if (this.frm.doc.advances && this.frm.doc.advances.length > 0) {

erpnext/regional/italy/test_italy.py

@@ -0,0 +1,80 @@
+import frappe
+from frappe.tests.utils import FrappeTestCase
+
+from erpnext.regional.italy.utils import get_invoice_summary
+
+VAT_7 = "_Test Italy VAT 7 - _TC"
+VAT_19 = "_Test Italy VAT 19 - _TC"
+
+
+def make_item(item_code, net_amount, tax_amount, item_tax_rate):
+	return frappe._dict(
+		item_code=item_code,
+		net_amount=net_amount,
+		tax_amount=tax_amount,
+		item_tax_rate=item_tax_rate,
+	)
+
+
+def make_tax(account_head, total, charge_type="On Net Total", **kwargs):
+	return frappe._dict(
+		charge_type=charge_type,
+		account_head=account_head,
+		rate=0,
+		total=total,
+		tax_exemption_reason="N4-esenti",
+		tax_exemption_law="Art.10",
+		**kwargs,
+	)
+
+
+class TestItalyInvoiceSummary(FrappeTestCase):
+	def test_not_applicable_tax_excluded_from_summary(self):
+		"""An item that marks a tax not applicable belongs to another summary
+		block. Counting it here inflates DatiRiepilogo and emits a block with
+		AliquotaIVA 0.00 and no Natura, which SDI rejects."""
+		items = [
+			make_item("A", 100.0, 7.0, {VAT_7: 7.0, VAT_19: "N/A"}),
+			make_item("B", 100.0, 19.0, {VAT_7: "N/A", VAT_19: 19.0}),
+		]
+		taxes = [make_tax(VAT_7, 107.0), make_tax(VAT_19, 126.0)]
+
+		summary = get_invoice_summary(items, taxes)
+
+		self.assertEqual(sorted(summary.keys()), ["19.0", "7.0"])
+		self.assertEqual(summary["7.0"]["taxable_amount"], 100.0)
+		self.assertEqual(summary["19.0"]["taxable_amount"], 100.0)
+
+	def test_zero_rated_tax_keeps_exemption_reason(self):
+		"""A genuine 0% rate is still exempt and must carry its Natura."""
+		items = [make_item("C", 100.0, 0.0, {VAT_7: 0.0})]
+
+		summary = get_invoice_summary(items, [make_tax(VAT_7, 100.0)])
+
+		self.assertEqual(list(summary.keys()), ["0.0"])
+		self.assertEqual(summary["0.0"]["taxable_amount"], 100.0)
+		self.assertEqual(summary["0.0"]["tax_exemption_reason"], "N4-esenti")
+
+	def test_all_items_not_applicable_falls_back_to_zero_vat(self):
+		"""With every item excluded the summary would be empty, so the existing
+		zero VAT fallback has to supply the block and its Natura."""
+		items = [make_item("D", 100.0, 0.0, {VAT_7: "N/A"})]
+
+		summary = get_invoice_summary(items, [make_tax(VAT_7, 100.0)])
+
+		self.assertEqual(list(summary.keys()), ["0.0"])
+		self.assertEqual(summary["0.0"]["tax_exemption_reason"], "N4-esenti")
+
+	def test_previous_row_tax_with_only_not_applicable_items(self):
+		"""The summary key leaks out of the item loop and is read again for
+		previous-row charges. Every item being excluded leaves it unset."""
+		items = [make_item("A", 100.0, 0.0, {VAT_7: 0.0, VAT_19: "N/A"})]
+		taxes = [
+			make_tax(VAT_7, 100.0, idx=1),
+			make_tax(VAT_19, 100.0, charge_type="On Previous Row Total", idx=2, row_id=None),
+		]
+
+		summary = get_invoice_summary(items, taxes)
+
+		self.assertEqual(list(summary.keys()), ["0.0"])
+		self.assertEqual(summary["0.0"]["taxable_amount"], 100.0)

erpnext/regional/italy/utils.py

@@ -8,6 +8,7 @@ from frappe.utils.file_manager import remove_file
 
 from erpnext.controllers.taxes_and_totals import get_itemised_tax
 from erpnext.regional.italy import state_codes
+from erpnext.stock.get_item_details import NOT_APPLICABLE_TAX
 
 
 def update_itemised_tax_data(doc):
@@ -171,13 +172,20 @@ def get_invoice_summary(items, taxes):
 
 		# Check item tax rates if tax rate is zero.
 		if tax.rate == 0:
+			key = None
 			for item in items:
 				item_tax_rate = item.item_tax_rate
 				if isinstance(item.item_tax_rate, str):
 					item_tax_rate = json.loads(item.item_tax_rate)
 
 				if item_tax_rate and tax.account_head in item_tax_rate:
-					key = cstr(item_tax_rate[tax.account_head])
+					rate = item_tax_rate[tax.account_head]
+					if rate == NOT_APPLICABLE_TAX:
+						# the tax does not apply to this item, so the item belongs
+						# to another summary block and must not be counted here
+						continue
+
+					key = cstr(rate)
 					if key not in summary_data:
 						summary_data.setdefault(
 							key,
@@ -195,10 +203,15 @@ def get_invoice_summary(items, taxes):
 						summary_data[key]["tax_exemption_reason"] = tax.tax_exemption_reason
 						summary_data[key]["tax_exemption_law"] = tax.tax_exemption_law
 
-			if summary_data.get("0.0") and tax.charge_type in [
+			if (
-				"On Previous Row Total",
+				key
-				"On Previous Row Amount",
+				and summary_data.get("0.0")
-			]:
+				and tax.charge_type
+				in [
+					"On Previous Row Total",
+					"On Previous Row Amount",
+				]
+			):
 				summary_data[key]["taxable_amount"] = tax.total
 
 			if summary_data == {}:  # Implies that Zero VAT has not been set on any item.

erpnext/stock/get_item_details.py

@@ -34,6 +34,8 @@ purchase_doctypes = [
 	"Purchase Invoice",
 ]
 
+NOT_APPLICABLE_TAX = "N/A"
+
 
 @frappe.whitelist()
 def get_item_details(args, doc=None, for_validate=False, overwrite_warehouse=True):
@@ -806,7 +808,10 @@ def get_item_tax_map(company, item_tax_template, as_json=True):
 		template = frappe.get_cached_doc("Item Tax Template", item_tax_template)
 		for d in template.taxes:
 			if frappe.get_cached_value("Account", d.tax_type, "company") == company:
-				item_tax_map[d.tax_type] = d.tax_rate
+				if d.get("not_applicable"):
+					item_tax_map[d.tax_type] = NOT_APPLICABLE_TAX
+				else:
+					item_tax_map[d.tax_type] = d.tax_rate
 
 	return json.dumps(item_tax_map) if as_json else item_tax_map