A country-specific update is available to load India taxes that has the "Load on Inventory" option enabled in the project cost in Microsoft Dynamics AX 2009 SP1 with the India localization layer installed

In India, taxes that are paid on purchases of goods and services can be set off against the due tax liability. However, for certain categories of goods and services, the tax credit on the purchases cannot be claimed or can only be partly claimed. In this situation, the tax amount will be added to the cost of inventory.

Currently, in Microsoft Dynamics AX 2009 SP1, the project management and accounting solution that contains a comprehensive suite of project accounting and reporting features does not work with the India tax features as expected.
For example, the Load on Inventory option is set as fully or partly for an indirect tax, and a transactions that contains the indirect tax is posted to a project type account through an invoice journal, a general journal or a project expense journal. In this situation, the tax amount is not added to the corresponding project as expected.

However, the system should be able to apply the Load on Inventory option for a tax code that is related to an India indirect tax, such as service tax, sales tax, value-added tax (VAT), Excise tax and Customs tax, when transactions are posted to a project type account through the journals.

To handle the Load on Inventory option for the India indirect tax in invoice journals, general journals and project expense journals, a new country-specific update is available in Microsoft Dynamics AX 2009 SP1 with the India localization layer installed.

After you apply this update, tax amounts will be added to the corresponding project cost when transactions are posted with indirect taxes that have the Load on Inventory option enabled.