diff --git a/erpnext/accounts/doctype/sales_invoice/pos.py b/erpnext/accounts/doctype/sales_invoice/pos.py
index 419c557..f1f997a 100644
--- a/erpnext/accounts/doctype/sales_invoice/pos.py
+++ b/erpnext/accounts/doctype/sales_invoice/pos.py
@@ -32,7 +32,7 @@
 		'doc': doc,
 		'default_customer': pos_profile.get('customer'),
 		'items': get_items_list(pos_profile),
-		'item_groups': get_item_group(pos_profile),
+		'item_groups': get_item_groups(pos_profile),
 		'customers': customers,
 		'address': get_customers_address(customers),
 		'serial_no_data': get_serial_no_data(pos_profile, doc.company),
@@ -132,7 +132,7 @@
 	if pos_profile.get('item_groups'):
 		# Get items based on the item groups defined in the POS profile
 		for d in pos_profile.get('item_groups'):
-			item_groups.extend(get_child_nodes('Item Group', d.item_group))
+			item_groups.extend([d.name for d in get_child_nodes('Item Group', d.item_group)])
 		cond = "item_group in (%s)"%(', '.join(['%s']*len(item_groups)))
 
 	return frappe.db.sql(""" 
@@ -146,14 +146,19 @@
 			disabled = 0 and has_variants = 0 and is_sales_item = 1 and {cond}
 		""".format(cond=cond), tuple(item_groups), as_dict=1)
 
-def get_item_group(pos_profile):
+def get_item_groups(pos_profile):
+	item_group_dict = {}
 	if pos_profile.get('item_groups'):
 		item_groups = []
 		for d in pos_profile.get('item_groups'):
 			item_groups.extend(get_child_nodes('Item Group', d.item_group))
-		return item_groups
 	else:
-		return frappe.db.sql_list("""Select name from `tabItem Group` order by name""")
+		item_groups = frappe.db.sql("""Select name,
+			lft, rgt from `tabItem Group` order by lft""", as_dict=1)
+
+	for data in item_groups:
+		item_group_dict[data.name] = [data.lft, data.rgt]
+	return item_group_dict
 
 def get_customers_list(pos_profile):
 	cond = "1=1"
@@ -161,7 +166,7 @@
 	if pos_profile.get('customer_groups'):
 		# Get customers based on the customer groups defined in the POS profile
 		for d in pos_profile.get('customer_groups'):
-			customer_groups.extend(get_child_nodes('Customer Group', d.customer_group))
+			customer_groups.extend([d.name for d in get_child_nodes('Customer Group', d.customer_group)])
 		cond = "customer_group in (%s)"%(', '.join(['%s']*len(customer_groups)))
 
 	return frappe.db.sql(""" select name, customer_name, customer_group,
@@ -187,8 +192,8 @@
 
 def get_child_nodes(group_type, root):
 	lft, rgt = frappe.db.get_value(group_type, root, ["lft", "rgt"])
-	return frappe.db.sql_list(""" Select name from `tab{tab}` where
-			lft >= {lft} and rgt <= {rgt}""".format(tab=group_type, lft=lft, rgt=rgt))
+	return frappe.db.sql(""" Select name, lft, rgt from `tab{tab}` where
+			lft >= {lft} and rgt <= {rgt} order by lft""".format(tab=group_type, lft=lft, rgt=rgt), as_dict=1)
 
 def get_serial_no_data(pos_profile, company):
 	# get itemwise serial no data
diff --git a/erpnext/accounts/page/pos/pos.js b/erpnext/accounts/page/pos/pos.js
index 670a577..7006761 100644
--- a/erpnext/accounts/page/pos/pos.js
+++ b/erpnext/accounts/page/pos/pos.js
@@ -407,8 +407,8 @@
 		});
 
 		this.search_item_group = this.wrapper.find('.search-item-group');
-
-		var dropdown_html = me.item_groups.map(function(item_group) {
+		sorted_item_groups = this.get_sorted_item_groups()
+		var dropdown_html = sorted_item_groups.map(function(item_group) {
 			return "<li><a class='option' data-value='"+item_group+"'>"+item_group+"</a></li>";
 		}).join("");
 
@@ -437,6 +437,15 @@
 		})
 	},
 
+	get_sorted_item_groups: function() {
+		list = {}
+		$.each(this.item_groups, function(i, data) {
+			list[i] = data[0]
+		})
+
+		return Object.keys(list).sort(function(a,b){return list[a]-list[b]})
+	},
+
 	toggle_more_btn: function() {
 		if(!this.items || this.items.length <= this.page_len) {
 			this.wrapper.find(".btn-more").hide();
@@ -1091,9 +1100,9 @@
 		// $(me.wrapper).find(".pos-item-wrapper").on("click", function () {
 		$(this.wrapper).on("click", ".pos-item-wrapper", function () {
 			me.item_code = '';
+			me.customer_validate();
 			if($(me.pos_bill).is(":hidden")) return;
 
-			me.customer_validate();
 			if (me.frm.doc.docstatus == 0) {
 				me.items = me.get_items($(this).attr("data-item-code"))
 				me.add_to_cart();
@@ -1768,7 +1777,7 @@
 		var me = this;
 		return $.grep(this.pricing_rules, function (data) {
 			if (item.qty >= data.min_qty && (item.qty <= (data.max_qty ? data.max_qty : item.qty))) {
-				if (data.item_code == item.item_code || in_list(['All Item Groups', item.item_group], data.item_group) || item.brand == data.brand) {
+				if (me.validate_item_condition(data, item)) {
 					if (in_list(['Customer', 'Customer Group', 'Territory', 'Campaign'], data.applicable_for)) {
 						return me.validate_condition(data)
 					} else {
@@ -1779,6 +1788,26 @@
 		})
 	},
 
+	validate_item_condition: function (data, item) {
+		var apply_on = frappe.model.scrub(data.apply_on);
+
+		return (data.apply_on == 'Item Group')
+			? this.validate_item_group(data.item_group, item.item_group) : (data[apply_on] == item[apply_on]);
+	},
+
+	validate_item_group: function (pr_item_group, cart_item_group) {
+		//pr_item_group = pricing rule's item group
+		//cart_item_group = cart item's item group
+		//this.item_groups has information about item group's lft and rgt
+		//for example: {'Foods': [12, 19]}
+
+		pr_item_group = this.item_groups[pr_item_group]
+		cart_item_group = this.item_groups[cart_item_group]
+
+		return (cart_item_group[0] >= pr_item_group[0] &&
+			cart_item_group[1] <= pr_item_group[1])
+	},
+
 	validate_condition: function (data) {
 		//This method check condition based on applicable for
 		condition = this.get_mapper_for_pricing_rule(data)[data.applicable_for]