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Indirect Taxation
Indirect Taxation
Part I – Value Added Tax
Value Added Tax
• A state tax• Imposed through State legislature enactments• An Indirect Tax on sale of goods• Goods sold within the State• Responsibility of the Seller to collect the tax and
pay it to the State• VAT Act does not apply to
– inter-state sale– Export or import of goods
1: Identify whether VAT would be applicable in following transactions
Sr. Particulars VAT applicable?
1 Sale of goods from Mumbai to Bangalore
2 Export of goods to Europe
3 Services provided from Mumbai to a trader of goods in Pune
4 Sale of goods from Mumbai to Nasik
1: Identify whether VAT would be applicable in following transactions
Sr. Particulars VAT applicable?
1 Sale of goods from Mumbai to Bangalore
N
2 Export of goods to Europe
3 Services provided from Mumbai to a trader of goods in Pune
4 Sale of goods from Mumbai to Nasik
1: Identify whether VAT would be applicable in following transactions
Sr. Particulars VAT applicable?
1 Sale of goods from Mumbai to Bangalore
N
2 Export of goods to Europe N
3 Services provided from Mumbai to a trader of goods in Pune
4 Sale of goods from Mumbai to Nasik
1: Identify whether VAT would be applicable in following transactions
Sr. Particulars VAT applicable?
1 Sale of goods from Mumbai to Bangalore
N
2 Export of goods to Europe N
3 Services provided from Mumbai to a trader of goods in Pune
N
4 Sale of goods from Mumbai to Nasik
1: Identify whether VAT would be applicable in following transactions
Sr. Particulars VAT applicable?
1 Sale of goods from Mumbai to Bangalore
N
2 Export of goods to Europe N
3 Services provided from Mumbai to a trader of goods in Pune
N
4 Sale of goods from Mumbai to Nasik
Y
• The Act taxes all sale transactions of ‘dealers’ within the State
• The dealers whose turnover exceeds a turnover of Rs. 5 lakhs a year are required to register for application of VAT
• Dealer broadly covers every one who is buying and selling goods in relation to business
• Depending upon the turnover of the dealer, the taxes are deposited with the State either on– Monthly basis; or Quarterly basis: or Half
Yearly basis.
Registered Dealers
Period of filing VAT & VAT Return
Sr Annual Tax Liability Period of payment of VAT & filing returns
1 Upto Rs. 1 Lacs Half Yearly
2 Above Rs 1 Lacs But less than Rs 10 Lacs
Quarterly
2 More than Rs. 10 Lacs Monthly
Output and Input tax
• Output tax:– The tax liability of the Dealer for a period,
month or quarter, is required to be calculated taking into account each sale and rate of taxation for that goods
• Input tax:– The VAT paid by the Dealer on the purchases
with adequate documentation supporting the payment of tax
2: Calculate Input Tax for the dealer based in Mumbai
Sr. Particulars Input tax? Rs.’000
1 Tax paid on purchase of goods from Pune
50
2 Import duty paid on purchase of goods from Malaysia
150
3 Sales Tax paid on purchase of goods from New Delhi
40
4 Octroi paid on goods brought into city limits
10
Total
2: Calculate Input Tax for the dealer based in Mumbai
Sr. Particulars Input tax? Rs.’000
1 Tax paid on purchase of goods from Pune
Y 50
2 Import duty paid on purchase of goods from Malaysia
150
3 Sales Tax paid on purchase of goods from New Delhi
40
4 Octroi paid on goods brought into city limits
10
Total
2: Calculate Input Tax for the dealer based in Mumbai
Sr. Particulars Input tax? Rs.’000
1 Tax paid on purchase of goods from Pune
Y 50
2 Import duty paid on purchase of goods from Malaysia
N
3 Sales Tax paid on purchase of goods from New Delhi
40
4 Octroi paid on goods brought into city limits
10
Total
2: Calculate Input Tax for the dealer based in Mumbai
Sr. Particulars Input tax? Rs.’000
1 Tax paid on purchase of goods from Pune
Y 50
2 Import duty paid on purchase of goods from Malaysia
N
3 Sales Tax paid on purchase of goods from New Delhi
N
4 Octroi paid on goods brought into city limits
10
Total
2: Calculate Input Tax for the dealer based in Mumbai
Sr. Particulars Input tax? Rs.’000
1 Tax paid on purchase of goods from Pune
Y 50
2 Import duty paid on purchase of goods from Malaysia
N
3 Sales Tax paid on purchase of goods from New Delhi
N
4 Octroi paid on goods brought into city limits
N
Total 50
3: Calculate VAT payable by Lloyds Machinery Manufacturers Ltd.
Sr Particulars Rs.’000 VAT
1 Material purchased from local market
3000
2 Value Added Tax on above 375
3 Conversion cost and profit 1000
4 Total Sale Value
5 Output VAT rate 12.5%
6 Less: VAT credit
7 Net VAT Payable
3: Calculate VAT payable by Lloyds Machinery Manufacturers Ltd.
Sr Particulars Rs.’000 VAT
1 Material purchased from local market
3000 3000
2 Value Added Tax on above 375
3 Conversion cost and profit 1000
4 Total Sale Value
5 Output VAT rate 12.5%
6 Less: VAT credit
7 Net VAT Payable
3: Calculate VAT payable by Lloyds Machinery Manufacturers Ltd.
Sr Particulars Rs.’000 VAT
1 Material purchased from local market
3000 3000
2 Value Added Tax on above 375 -
3 Conversion cost and profit 1000
4 Total Sale Value
5 Output VAT rate 12.5%
6 Less: VAT credit
7 Net VAT Payable
3: Calculate VAT payable by Lloyds Machinery Manufacturers Ltd.
Sr Particulars Rs.’000 VAT
1 Material purchased from local market
3000 3000
2 Value Added Tax on above 375 -
3 Conversion cost and profit 1000 1000
4 Total Sale Value 4000
5 Output VAT rate 12.5%
6 Less: VAT credit
7 Net VAT Payable
3: Calculate VAT payable by Lloyds Machinery Manufacturers Ltd.
Sr Particulars Rs.’000 VAT
1 Material purchased from local market
3000 3000
2 Value Added Tax on above 375 -
3 Conversion cost and profit 1000 1000
4 Total Sale Value 4000
5 Output VAT rate 12.5% 500
6 Less: VAT credit
7 Net VAT Payable
3: Calculate VAT payable by Lloyds Machinery Manufacturers Ltd.
Sr Particulars Rs.’000 VAT
1 Material purchased from local market
3000 3000
2 Value Added Tax on above 375 -
3 Conversion cost and profit 1000 1000
4 Total Sale Value 4000
5 Output VAT rate 12.5% 500
6 Less: VAT credit 375
7 Net VAT Payable
3: Calculate VAT payable by Lloyds Machinery Manufacturers Ltd.
Sr Particulars Rs.’000 VAT
1 Material purchased from local market
3000 3000
2 Value Added Tax on above 375 -
3 Conversion cost and profit 1000 1000
4 Total Sale Value 4000
5 Output VAT rate 12.5% 500
6 Less: VAT credit 375
7 Net VAT Payable 125
4: Calculate VAT payable by Quick fix Ltd.
Sr Particulars Rs.’000 VAT
1 Material imported from Taiwan 1000 1000
2 Import duty paid on above 125
3 Material purchased from local market 2000
4 Value Added Tax on above 250
5 Conversion cost and profit 1875
6 Total Sale Value
7 Output VAT rate 12.5%
8 Less: VAT credit
9 Net VAT Payable
4: Calculate VAT payable by Quick fix Ltd.
Sr Particulars Rs.’000 VAT
1 Material imported from Taiwan 1000 1000
2 Import duty paid on above 125 125
3 Material purchased from local market 2000 2000
4 Value Added Tax on above 250
5 Conversion cost and profit 1875
6 Total Sale Value
7 Output VAT rate 12.5%
8 Less: VAT credit
9 Net VAT Payable
4: Calculate VAT payable by Quick fix Ltd.
Sr Particulars Rs.’000 VAT
1 Material imported from Taiwan 1000 1000
2 Import duty paid on above 125 125
3 Material purchased from local market 2000 2000
4 Value Added Tax on above 250 -
5 Conversion cost and profit 1875 1875
6 Total Sale Value 5000
7 Output VAT rate 12.5%
8 Less: VAT credit
9 Net VAT Payable
4: Calculate VAT payable by Quick fix Ltd.
Sr Particulars Rs.’000 VAT
1 Material imported from Taiwan 1000 1000
2 Import duty paid on above 125 125
3 Material purchased from local market 2000 2000
4 Value Added Tax on above 250 -
5 Conversion cost and profit 1875 1875
6 Total Sale Value 5000
7 Output VAT rate 12.5% 625
8 Less: VAT credit
9 Net VAT Payable
4: Calculate VAT payable by Quick fix Ltd.
Sr Particulars Rs.’000 VAT
1 Material imported from Taiwan 1000 1000
2 Import duty paid on above 125 125
3 Material purchased from local market 2000 2000
4 Value Added Tax on above 250 -
5 Conversion cost and profit 1875 1875
6 Total Sale Value 5000
7 Output VAT rate 12.5% 625
8 Less: VAT credit 250
9 Net VAT Payable
4: Calculate VAT payable by Quick fix Ltd.
Sr Particulars Rs.’000 VAT
1 Material imported from Taiwan 1000 1000
2 Import duty paid on above 125 125
3 Material purchased from local market 2000 2000
4 Value Added Tax on above 250 -
5 Conversion cost and profit 1875 1875
6 Total Sale Value 5000
7 Output VAT rate 12.5% 625
8 Less: VAT credit 250
9 Net VAT Payable 375
5: Calculate VAT payable by Excel Printers Ltd.
Sr Particulars Rs.’000 VAT
1 Material imported from Taiwan 500 500
2 Import duty paid on above 50
3 Material purchased from local market 4000
4 Value Added Tax on above 500
5 Material purchased from another state 1000
6 Central Sales Tax paid 20
7 Conversion cost and profit 1430
8 Total Sale Value
9 Output VAT rate 12.5%
10 Less: VAT credit
11 Net VAT Payable
5: Calculate VAT payable by Excel Printers Ltd.
Sr Particulars Rs.’000 VAT
1 Material imported from Taiwan 500 500
2 Import duty paid on above 50 50
3 Material purchased from local market 4000 4000
4 Value Added Tax on above 500
5 Material purchased from another state 1000
6 Central Sales Tax paid 20
7 Conversion cost and profit 1430
8 Total Sale Value
9 Output VAT rate 12.5%
10 Less: VAT credit
11 Net VAT Payable
5: Calculate VAT payable by Excel Printers Ltd.
Sr Particulars Rs.’000 VAT
1 Material imported from Taiwan 500 500
2 Import duty paid on above 50 50
3 Material purchased from local market 4000 4000
4 Value Added Tax on above 500 -
5 Material purchased from another state 1000 1000
6 Central Sales Tax paid 20
7 Conversion cost and profit 1430
8 Total Sale Value
9 Output VAT rate 12.5%
10 Less: VAT credit
11 Net VAT Payable
5: Calculate VAT payable by Excel Printers Ltd.
Sr Particulars Rs.’000 VAT
1 Material imported from Taiwan 500 500
2 Import duty paid on above 50 50
3 Material purchased from local market 4000 4000
4 Value Added Tax on above 500 -
5 Material purchased from another state 1000 1000
6 Central Sales Tax paid 20 20
7 Conversion cost and profit 1430 1430
8 Total Sale Value
9 Output VAT rate 12.5%
10 Less: VAT credit
11 Net VAT Payable
5: Calculate VAT payable by Excel Printers Ltd.
Sr Particulars Rs.’000 VAT
1 Material imported from Taiwan 500 500
2 Import duty paid on above 50 50
3 Material purchased from local market 4000 4000
4 Value Added Tax on above 500 -
5 Material purchased from another state 1000 1000
6 Central Sales Tax paid 20 20
7 Conversion cost and profit 1430 1430
8 Total Sale Value 7000
9 Output VAT rate 12.5%
10 Less: VAT credit
11 Net VAT Payable
5: Calculate VAT payable by Excel Printers Ltd.
Sr Particulars Rs.’000 VAT
1 Material imported from Taiwan 500 500
2 Import duty paid on above 50 50
3 Material purchased from local market 4000 4000
4 Value Added Tax on above 500 -
5 Material purchased from another state 1000 1000
6 Central Sales Tax paid 20 20
7 Conversion cost and profit 1430 1430
8 Total Sale Value 7000
9 Output VAT rate 12.5% 875
10 Less: VAT credit
11 Net VAT Payable
5: Calculate VAT payable by Excel Printers Ltd.
Sr Particulars Rs.’000 VAT
1 Material imported from Taiwan 500 500
2 Import duty paid on above 50 50
3 Material purchased from local market 4000 4000
4 Value Added Tax on above 500 -
5 Material purchased from another state 1000 1000
6 Central Sales Tax paid 20 20
7 Conversion cost and profit 1430 1430
8 Total Sale Value 7000
9 Output VAT rate 12.5% 875
10 Less: VAT credit 500
11 Net VAT Payable 375
6: Calculate VAT payable by Design Creations
Sr Particulars Rs.’000 VAT
1 Raw material purchase – local 1600 1600
2 VAT paid on above 200
3 Office material purchase – local 200
4 Value Added Tax on above 25
5 Conversion cost and profit 200
6 Total
7 Output VAT rate 12.5%
8 Less: VAT credit
9 Net VAT Payable
6: Calculate VAT payable by Design Creations
Sr Particulars Rs.’000 VAT
1 Raw material purchase – local 1600 1600
2 VAT paid on above 200 -
3 Office material purchase – local 200 200
4 Value Added Tax on above 25
5 Conversion cost and profit 200
6 Total
7 Output VAT rate 12.5%
8 Less: VAT credit
9 Net VAT Payable
6: Calculate VAT payable by Design Creations
Sr Particulars Rs.’000 VAT
1 Raw material purchase – local 1600 1600
2 VAT paid on above 200 -
3 Office material purchase – local 200 200
4 Value Added Tax on above 25 -
5 Conversion cost and profit 200 200
6 Total
7 Output VAT rate 12.5%
8 Less: VAT credit
9 Net VAT Payable
6: Calculate VAT payable by Design Creations
Sr Particulars Rs.’000 VAT
1 Raw material purchase – local 1600 1600
2 VAT paid on above 200 -
3 Office material purchase – local 200 200
4 Value Added Tax on above 25 -
5 Conversion cost and profit 200 200
6 Total 2000
7 Output VAT rate 12.5% 250
8 Less: VAT credit
9 Net VAT Payable
6: Calculate VAT payable by Design Creations
Sr Particulars Rs.’000 VAT
1 Raw material purchase – local 1600 1600
2 VAT paid on above 200 -
3 Office material purchase – local 200 200
4 Value Added Tax on above 25 -
5 Conversion cost and profit 200 200
6 Total 2000
7 Output VAT rate 12.5% 250
8 Less: VAT credit 225
9 Net VAT Payable 25
7: Calculate VAT payable by Clean Enviro Pvt. Ltd.
Sr Particulars Rs.’000 VAT
1 Raw material purchase – inter-state 2400 2400
2 VAT paid on above 300
3 Consumables/spares – imported 500
4 Value Added Tax on above 50
5 Conversion cost and profit 650
6 Total
7 Output VAT rate 12.5%
8 Less: VAT credit
9 Net VAT Payable
7: Calculate VAT payable by Clean Enviro Pvt. Ltd.
Sr Particulars Rs.’000 VAT
1 Raw material purchase – inter-state 2400 2400
2 VAT paid on above 300 300
3 Consumables/spares – imported 500 200
4 Value Added Tax on above 50
5 Conversion cost and profit 650
6 Total
7 Output VAT rate 12.5%
8 Less: VAT credit
9 Net VAT Payable
7: Calculate VAT payable by Clean Enviro Pvt. Ltd.
Sr Particulars Rs.’000 VAT
1 Raw material purchase – inter-state 2400 2400
2 VAT paid on above 300 300
3 Consumables/spares – imported 500 200
4 Value Added Tax on above 50 50
5 Conversion cost and profit 650 650
6 Total 3600
7 Output VAT rate 12.5% 450
8 Less: VAT credit
9 Net VAT Payable
7: Calculate VAT payable by Clean Enviro Pvt. Ltd.
Sr Particulars Rs.’000 VAT
1 Raw material purchase – inter-state 2400 2400
2 VAT paid on above 300 300
3 Consumables/spares – imported 500 200
4 Value Added Tax on above 50 50
5 Conversion cost and profit 650 650
6 Total 3600
7 Output VAT rate 12.5% 450
8 Less: VAT credit -
9 Net VAT Payable
7: Calculate VAT payable by Clean Enviro Pvt. Ltd.
Sr Particulars Rs.’000 VAT
1 Raw material purchase – inter-state 2400 2400
2 VAT paid on above 300 300
3 Consumables/spares – imported 500 200
4 Value Added Tax on above 50 50
5 Conversion cost and profit 650 650
6 Total 3600
7 Output VAT rate 12.5% 450
8 Less: VAT credit -
9 Net VAT Payable 450
Important Concepts –
Particulars
Added for calculation of Total Price on which VAT is
calculated?
Whether credit available?
VAT paid on purchase of
Raw/Packing Mat.NO YES
Import Duty YES NO
Central Sales Tax YES NO
Variants of VAT with regards to credit for VAT paid on inputs–
Gross Product Variant
Income Variant Consumption Variant
Credit of VAT paid on all inputs except VAT paid on purchase of Capital Assets.
Credit of VAT paid on all inputs. VAT paid on purchase of capital assets is available in proportion to the depreciation on such assets.
Credit of VAT paid on all inputs including VAT paid on purchase of Capital Assets is available in the year of purchase.
Most of the states in India follow the Consumption Variant
7: Calculate VAT payable by Health Works Ltd.
Sr Particulars Rs.’000 VAT
1 Raw material purchase – local 1200 1200
2 VAT paid on above 150
3 Capital exp(Depreciated@20% SLM) 5000
4 Value Added Tax on above 625
5 Conversion cost and profit 200
6 Total Sale Value
7 Output VAT rate 12.5%
8 Less: VAT credit
9 Net VAT
7: Calculate VAT payable by Health Works Ltd.
Sr Particulars Rs.’000 VAT
1 Raw material purchase – local 1200 1200
2 VAT paid on above 150 -
3 Capital exp(Depreciated@20% SLM) 5000
4 Value Added Tax on above 625
5 Conversion cost and profit 200
6 Total Sale Value
7 Output VAT rate 12.5%
8 Less: VAT credit
9 Net VAT
7: Calculate VAT payable by Health Works Ltd.
Sr Particulars Rs.’000 VAT
1 Raw material purchase – local 1200 1200
2 VAT paid on above 150 -
3 Capital exp(Depreciated@20% SLM) 5000 1000
4 Value Added Tax on above 625
5 Conversion cost and profit 200
6 Total Sale Value
7 Output VAT rate 12.5%
8 Less: VAT credit
9 Net VAT
7: Calculate VAT payable by Health Works Ltd.
Sr Particulars Rs.’000 VAT
1 Raw material purchase – local 1200 1200
2 VAT paid on above 150 -
3 Capital exp(Depreciated@20% SLM) 5000 1000
4 Value Added Tax on above 625 -
5 Conversion cost and profit 200 200
6 Total Sale Value 2400
7 Output VAT rate 12.5% 300
8 Less: VAT credit
9 Net VAT
7: Calculate VAT payable by Health Works Ltd.
Sr Particulars Rs.’000 VAT
1 Raw material purchase – local 1200 1200
2 VAT paid on above 150 -
3 Capital exp(Depreciated@20% SLM) 5000 1000
4 Value Added Tax on above 625 -
5 Conversion cost and profit 200 200
6 Total Sale Value 2400
7 Output VAT rate 12.5% 300
8 Less: VAT credit 775
9 Net VAT
7: Calculate VAT payable by Health Works Ltd.
Sr Particulars Rs.’000 VAT
1 Raw material purchase – local 1200 1200
2 VAT paid on above 150 -
3 Capital exp(Depreciated@20% SLM) 5000 1000
4 Value Added Tax on above 625 -
5 Conversion cost and profit 200 200
6 Total Sale Value 2400
7 Output VAT rate 12.5% 300
8 Less: VAT credit 775
9 Net VAT carried forward for set-off against future VAT payable
(475)
8: Calculate VAT payable by Fast Liners Ltd. having 100% Exports
Sr Particulars Rs.’000 VAT
1 Raw material purchase – local 1600 1600
2 VAT paid on above 200
3 Capital exp(Depreciated@25% SLM) 4000
4 Value Added Tax on above 500
5 Conversion cost and profit 400
6 Total Sale Value
7 Output VAT rate 0%
8 Less: VAT credit
9 Net VAT
8: Calculate VAT payable by Fast Liners Ltd. having 100% Exports
Sr Particulars Rs.’000 VAT
1 Raw material purchase – local 1600 1600
2 VAT paid on above 200 -
3 Capital exp(Depreciated@25% SLM) 4000 1000
4 Value Added Tax on above 500
5 Conversion cost and profit 400
6 Total Sale Value
7 Output VAT rate 0%
8 Less: VAT credit
9 Net VAT
8: Calculate VAT payable by Fast Liners Ltd. having 100% Exports
Sr Particulars Rs.’000 VAT
1 Raw material purchase – local 1600 1600
2 VAT paid on above 200 -
3 Capital exp(Depreciated@25% SLM) 4000 1000
4 Value Added Tax on above 500 -
5 Conversion cost and profit 400 400
6 Total Sale Value 3000
7 Output VAT rate 0%
8 Less: VAT credit
9 Net VAT
8: Calculate VAT payable by Fast Liners Ltd. having 100% Exports
Sr Particulars Rs.’000 VAT
1 Raw material purchase – local 1600 1600
2 VAT paid on above 200 -
3 Capital exp(Depreciated@25% SLM) 4000 1000
4 Value Added Tax on above 500 -
5 Conversion cost and profit 400 400
6 Total Sale Value 3000
7 Output VAT rate 0% 0
8 Less: VAT credit
9 Net VAT
8: Calculate VAT payable by Fast Liners Ltd. having 100% Exports
Sr Particulars Rs.’000 VAT
1 Raw material purchase – local 1600 1600
2 VAT paid on above 200 -
3 Capital exp(Depreciated@25% SLM) 4000 1000
4 Value Added Tax on above 500 -
5 Conversion cost and profit 400 400
6 Total Sale Value 3000
7 Output VAT rate 0% 0
8 Less: VAT credit 700
9 Net VAT
8: Calculate VAT payable by Fast Liners Ltd. having 100% Exports
Sr Particulars Rs.’000 VAT
1 Raw material purchase – local 1600 1600
2 VAT paid on above 200 -
3 Capital exp(Depreciated@25% SLM) 4000 1000
4 Value Added Tax on above 500 -
5 Conversion cost and profit 400 400
6 Total Sale Value 3000
7 Output VAT rate 0% 0
8 Less: VAT credit 700
9 Net VAT (eligible for claiming refund in absence of future VAT payable)
(700)
Part II – Excise Duty
Excise Duty• Governed under Central Excise Act, 1944
• A central act under control of Central Govt.
• An indirect tax on goods
• Excise duty is a duty on excisable goods produced or manufactured in India
• Basic excise duty is also known as CENVAT
Sec.3 – Basic conditions for levy of excise duty
• There must be goods
• The goods must be excisable
• The goods must have been produced or manufactured
• Such production or manufacture must be in India
Concept of Taxable Event andDate of Removal of goods
• Taxable Event in Central Excise is production or manufacture of excisable goods.
• Rule 4: Duty is payable at the time of removal of goods from the factory or warehouse.
• Rule 5: The relevant date for determining rate of duty and tariff valuation shall be the date of actual removal of goods from the factory or warehouse
What is “Goods” under Central Excise
• Goods has not been defined in the Act• In the case of UOI v. Delhi Cloth and General
Mills Co. Ltd., Supreme Court held that an article can be called “goods” if it is known to the market as such and can ordinarily come to the market for being bought and sold
• Thus, the two fundamental characteristics of goods are – “Movability and Marketability”
Excisable Goods
• Sec.2(d) – Goods specified in the First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985
• Even goods with ‘nil’ rate of duty, if find an entry in the Schedules to the Tariff, are excisable goods, because nil rate is also a rate of duty– CCEx. v. Vazir Sultan Tobacco Co. Ltd. (SC)
Factory
• Sec.2(e) – Factory means any premises, including precincts thereof, wherein or in any part of which any excisable goods other than salt are manufactured or wherein or in part of which any manufacturing process connected with production of these goods is being carried on or is ordinarily carried on.
Basis of payment of excise duty• Specific Duty: payable on the basis of certain units like
length, weight, volume, thickness etc. (Cement, Cig.)• Ad-Valorem Duty: levied by applying the given
percentage of the value of goods –– Tariff value (Pan Masala, Readymade garments)– Transaction value– Retail Sale price (Cosmetics, Detergents)
• Duty based on Production capacity: also known as Compounded Levy Scheme
CENVAT Scheme• Allows the credit of the duty paid on the inputs
and capital goods and service tax paid on input service, which is to be utilised for the payment of excise duty
• Objective of reducing cascading impact on price of finished goods
• Credit of duty on Capital Goods restricted to 50% in the first year and balance in second year
• Input Service Tax credit allowed only when payment for services is made
• No CENVAT credit for exempted final product
1. Compute the cost of product with and without CENVAT
Raw Material X of Rs. 20000 converted into Product Y by value addition of Rs. 30000; Product is converted into final Product Z by value addition of Rs. 40000. Applicable Excise Duty is 8% (plus EC and SHEC)
Raw Material X of Rs. 20000 converted into Product Y by value addition of Rs. 30000; Product is converted into final Product Z by value addition of Rs. 40000. Applicable Excise Duty is 8% (plus EC and SHEC). Compute Cost of Product Z with and without CENVAT.
Sr Particulars Without CENVAT
With CENVAT
1 Raw Material Cost X 20000
2 Add: Excise @ 8.24% 1648
3 Total 21648
4 Credit allowed
5 R.M.Cost of X (net of excise)
6 Value Addition
7 Total
Raw Material X of Rs. 20000 converted into Product Y by value addition of Rs. 30000; Product is converted into final Product Z by value addition of Rs. 40000. Applicable Excise Duty is 8% (plus EC and SHEC). Compute Cost of Product Z with and without CENVAT.
Sr Particulars Without CENVAT
With CENVAT
1 Raw Material Cost X 20000
2 Add: Excise @ 8.24% 1648
3 Total 21648
4 Credit allowed -
5 R.M.Cost of X (net of excise) 21648
6 Value Addition 30000
7 Total 51648
Raw Material X of Rs. 20000 converted into Product Y by value addition of Rs. 30000; Product is converted into final Product Z by value addition of Rs. 40000. Applicable Excise Duty is 8% (plus EC and SHEC). Compute Cost of Product Z with and without CENVAT.
Sr Particulars Without CENVAT
With CENVAT
7 Total 51648
8 Add: Excise @ 8.24% 4256
9 Cost of Product Y 55904
10 Credit allowed
11 Cost of Y (net of excise)
12 Value Addition
13 Total
Raw Material X of Rs. 20000 converted into Product Y by value addition of Rs. 30000; Product is converted into final Product Z by value addition of Rs. 40000. Applicable Excise Duty is 8% (plus EC and SHEC). Compute Cost of Product Z with and without CENVAT.
Sr Particulars Without CENVAT
With CENVAT
7 Total 51648
8 Add: Excise @ 8.24% 4256
9 Cost of Product Y 55904
10 Credit allowed -
11 Cost of Y (net of excise) 55904
12 Value Addition 40000
13 Total 95904
Raw Material X of Rs. 20000 converted into Product Y by value addition of Rs. 30000; Product is converted into final Product Z by value addition of Rs. 40000. Applicable Excise Duty is 8% (plus EC and SHEC). Compute Cost of Product Z with and without CENVAT.
Sr Particulars Without CENVAT
With CENVAT
13 Total 95904
14 Add: Excise @ 8.24% 7902
15 Cost of Product Z 103806
Raw Material X of Rs. 20000 converted into Product Y by value addition of Rs. 30000; Product is converted into final Product Z by value addition of Rs. 40000. Applicable Excise Duty is 8% (plus EC and SHEC). Compute Cost of Product Z with and without CENVAT.
Sr Particulars Without CENVAT
With CENVAT
1 Raw Material Cost X 20000 20000
2 Add: Excise @ 8.24% 1648 1648
3 Total 21648 21648
4 Credit allowed -
5 R.M.Cost of X (net of excise) 21648
6 Value Addition 30000
7 Total 51648
Raw Material X of Rs. 20000 converted into Product Y by value addition of Rs. 30000; Product is converted into final Product Z by value addition of Rs. 40000. Applicable Excise Duty is 8% (plus EC and SHEC). Compute Cost of Product Z with and without CENVAT.
Sr Particulars Without CENVAT
With CENVAT
1 Raw Material Cost X 20000 20000
2 Add: Excise @ 8.24% 1648 1648
3 Total 21648 21648
4 Credit allowed - 1648
5 R.M.Cost of X (net of excise) 21648 20000
6 Value Addition 30000 30000
7 Total 51648 50000
Raw Material X of Rs. 20000 converted into Product Y by value addition of Rs. 30000; Product is converted into final Product Z by value addition of Rs. 40000. Applicable Excise Duty is 8% (plus EC and SHEC). Compute Cost of Product Z with and without CENVAT.
Sr Particulars Without CENVAT
With CENVAT
7 Total 51648 50000
8 Add: Excise @ 8.24% 4256 4120
9 Cost of Product Y 55904 54120
10 Credit allowed -
11 Cost of Y (net of excise) 55904
12 Value Addition 40000
13 Total 95904
Raw Material X of Rs. 20000 converted into Product Y by value addition of Rs. 30000; Product is converted into final Product Z by value addition of Rs. 40000. Applicable Excise Duty is 8% (plus EC and SHEC). Compute Cost of Product Z with and without CENVAT.
Sr Particulars Without CENVAT
With CENVAT
7 Total 51648 50000
8 Add: Excise @ 8.24% 4256 4120
9 Cost of Product Y 55904 54120
10 Credit allowed - 4120
11 Cost of Y (net of excise) 55904 50000
12 Value Addition 40000 40000
13 Total 95904 90000
Raw Material X of Rs. 20000 converted into Product Y by value addition of Rs. 30000; Product is converted into final Product Z by value addition of Rs. 40000. Applicable Excise Duty is 8% (plus EC and SHEC). Compute Cost of Product Z with and without CENVAT.
Sr Particulars Without CENVAT
With CENVAT
13 Total 95904 90000
14 Add: Excise @ 8.24% 7902 7416
15 Cost of Product Z 103806 97416
Corus Ltd. sold the following units at the under mentioned price. Calculate the excise duty leviable if the rate of excise on the product is @ 8.24% (inclusive of E.C. and S.H.E.C.)
Sales Value Rs.1,000,000Excise on sales @ 8.24% Rs.?????
Total amount of purchases Rs. 600,000Excise on purchases @ 8.24% Rs. 49,440Amount of cenvat credit availed Rs. ?????
Net Excise Duty payable Rs. ?????
2. Calculate CENVAT credit and Excise Duty Payable
Corus Ltd. sold the following units at the under mentioned price. Calculate the excise duty leviable if the rate of excise on the product is @ 8.24% (inclusive of E.C. and S.H.E.C.)
Sales Value Rs.1,000,000Excise on sales @ 8.24% Rs.82,400
Total amount of purchases Rs. 600,000Excise on purchases @ 8.24% Rs. 49,440Amount of cenvat credit availed Rs. ?????
Net Excise Duty payable Rs. ?????
2. Calculate CENVAT credit and Excise Duty Payable
Corus Ltd. sold the following units at the under mentioned price. Calculate the excise duty leviable if the rate of excise on the product is @ 8.24% (inclusive of E.C. and S.H.E.C.)
Sales Value Rs.1,000,000Excise on sales @ 8.24% Rs.82,400
Total amount of purchases Rs. 600,000Excise on purchases @ 8.24% Rs. 49,440Amount of cenvat credit availed Rs.49,440
Net Excise Duty payable Rs. ?????
2. Calculate CENVAT credit and Excise Duty Payable
Corus Ltd. sold the following units at the under mentioned price. Calculate the excise duty leviable if the rate of excise on the product is @ 8.24% (inclusive of E.C. and S.H.E.C.)
Sales Value Rs.1,000,000Excise on sales @ 8.24% Rs.82,400
Total amount of purchases Rs. 600,000Excise on purchases @ 8.24% Rs. 49,440Amount of cenvat credit availed Rs. 49,440
Net Excise Duty payable Rs. 32,960
2. Calculate CENVAT credit and Excise Duty Payable
Assessable Value =
Cum-duty price - permissible deductions * 100100 + rate of duty
Permissible deductions:•Sales Tax•Cost of secondary, durable, returnable packing•Freight•Insurance, etc
3. Calculate Assessable Value when Cum-Duty Price is available
Question: Online Tec Ltd. gives the following information. Derive the assessable value of excisable goods.
Particulars Amount (Rs)
Cum-duty wholesale price including following costs:
15,000
Sales tax 2,000
Normal packing cost 1,000
Freight & Insurance 1,500
Durable & returnable packing 1,500
Rate of excise duty @ 8.24%
Answer:
Particulars Amount (Rs)
Cum-duty wholesale price 15,000
Less: Sales Tax 2,000
Normal packing cost
Freight & Insurance
Durable & returnable packing
Assessable Value
Answer:
Particulars Amount (Rs)
Cum-duty wholesale price 15,000
Less: Sales Tax 2,000
Normal packing cost -
Freight & Insurance
Durable & returnable packing
Assessable Value
Answer:
Particulars Amount (Rs)
Cum-duty wholesale price 15,000
Less: Sales Tax 2,000
Normal packing cost -
Freight & Insurance 1,500
Durable & returnable packing
Assessable Value
Answer:
Particulars Amount (Rs)
Cum-duty wholesale price 15,000
Less: Sales Tax 2,000
Normal packing cost -
Freight & Insurance 1,500
Durable & returnable packing 1,500
Sub-total 10,000
Assessable Value ?
Answer:Particulars Amount
(Rs)Cum-duty wholesale price 15,000
Less: Sales Tax 2,000
Normal packing cost -
Freight & Insurance 1,500
Durable & returnable packing 1,500
Sub-total 10,000
Assessable Value = 10,000 ÷ 108.24% 9,239
Hence, excise duty = Rs. 761 (Rs. 9,239 * 8.24%)
Swift Ltd. supplies raw materials to job worker Crisp Ltd. After completing the job work, the finished product of 100 packets are returned to Swift Ltd. with retail sale price as Rs. 20 on each packet. Product is covered under MRP provision and 40% abatement is available. Determine the assessable value.
4. Calculate Assessable Value when product is covered under MRP provision
Swift Ltd. supplies raw materials to job worker Crisp Ltd. After completing the job work, the finished product of 100 packets are returned to Swift Ltd. with retail sale price as Rs. 20 on each packet. Product is covered under MRP provision and 40% abatement is available. Determine the assessable value.Answer:
Particulars Amount (Rs)
Retail Sale price of each packet 20
Swift Ltd. supplies raw materials to job worker Crisp Ltd. After completing the job work, the finished product of 100 packets are returned to Swift Ltd. with retail sale price as Rs. 20 on each packet. Product is covered under MRP provision and 40% abatement is available. Determine the assessable value.Answer:
Particulars Amount (Rs)
Retail Sale price of each packet 20Less: Abatement 8Assessable Value per packet 12
Swift Ltd. supplies raw materials to job worker Crisp Ltd. After completing the job work, the finished product of 100 packets are returned to Swift Ltd. with retail sale price as Rs. 20 on each packet. Product is covered under MRP provision and 40% abatement is available. Determine the assessable value.
Answer:
Particulars Amount (Rs)
Retail Sale price of each packet 20Less: Abatement 8Assessable Value per packet 12Total assessable value (Rs 12 * 100) 1,200
5. Compute CENVAT credit and Excise Duty payable
Sr Particulars Rs.lacs Duty% Cenvat
1 Input Raw Material 200 8.24
2 Capital goods for mfr. 400 8.24
3 Input R.M. rejected 4
4 Unused Cap. goods 20
5 Excisable sale 600 24.72
5. Compute CENVAT credit and Excise Duty payable
Sr Particulars Rs.lacs Duty% Cvat ’000
1 Input R.M. 200 8.24
2 Capital goods for mfr. (credit of 50% in 1st year)
400 8.24
Total Input credit (A)
3 Input R.M. rejected 4
4 Unused Cap. goods 20
Sub-total (B)
Net Input Credit
5 Excisable sale 600 24.72
Net Excise duty payable in Cash
5. Compute CENVAT credit and Excise Duty payable
Sr Particulars Rs.lacs Duty% Cvat ’000
1 Input R.M. 200 8.24 1,648
2 Capital goods for mfr. (credit of 50% in 1st year)
400 8.24
Total Input credit (A)
3 Input R.M. rejected 4
4 Unused Cap. goods 20
Sub-total (B)
Net Input Credit
5 Excisable sale 600 24.72
Net Excise duty payable in Cash
5. Compute CENVAT credit and Excise Duty payable
Sr Particulars Rs.lacs Duty% Cvat ’000
1 Input R.M. 200 8.24 1,648
2 Capital goods for mfr. (credit of 50% in 1st year)
400 8.24 1,648
Total Input credit (A) 3,296
3 Input R.M. rejected 4
4 Unused Cap. goods 20
Sub-total (B)
Net Input Credit
5 Excisable sale 600 24.72
Net Excise duty payable in Cash
5. Compute CENVAT credit and Excise Duty payable
Sr Particulars Rs.lacs Duty% Cvat ’000
1 Input R.M. 200 8.24 1,648
2 Capital goods for mfr. (credit of 50% in 1st year)
400 8.24 1,648
Total Input credit (A) 3,296
3 Input R.M. rejected 4 8.24 32.96
4 Unused Cap. goods 20
Sub-total (B)
Net Input Credit
5 Excisable sale 600 24.72
Net Excise duty payable in Cash
5. Compute CENVAT credit and Excise Duty payable
Sr Particulars Rs.lacs Duty% Cvat ’000
1 Input R.M. 200 8.24 1,648
2 Capital goods for mfr. (credit of 50% in 1st year)
400 8.24 1,648
Total Input credit (A) 3,296
3 Input R.M. rejected 4 8.24 32.96
4 Unused Cap. goods 20 8.24 82.40
Sub-total (B) 115.36
Net Input Credit
5 Excisable sale 600 24.72
Net Excise duty payable in Cash
5. Compute CENVAT credit and Excise Duty payable
Sr Particulars Rs.lacs Duty% Cvat ’000
1 Input R.M. 200 8.24 1,648
2 Capital goods for mfr. (credit of 50% in 1st year)
400 8.24 1,648
Total Input credit (A) 3,296
3 Input R.M. rejected 4 8.24 32.96
4 Unused Cap. goods 20 8.24 82.40
Sub-total (B) 115.36
Net Input Credit (A-B) 3,180.64
5 Excisable sale 600 24.72
Net Excise duty payable in Cash:
5. Compute CENVAT credit and Excise Duty payable
Sr Particulars Rs.lacs Duty% Cvat ’000
1 Input R.M. 200 8.24 1,648
2 Capital goods for mfr. (credit of 50% in 1st year)
400 8.24 1,648
Total Input credit (A) 3,296
3 Input R.M. rejected 4 8.24 32.96
4 Unused Cap. goods 20 8.24 82.40
Sub-total (B) 115.36
Net Input Credit (A-B) 3,180.64
5 Excisable sale 600 24.72 14,832.0
Net Excise duty payable in Cash
5. Compute CENVAT credit and Excise Duty payable
Sr Particulars Rs.lacs Duty% Cvat ’000
1 Input R.M. 200 8.24 1,648
2 Capital goods for mfr. (credit of 50% in 1st year)
400 8.24 1,648
Total Input credit (A) 3,296
3 Input R.M. rejected 4 8.24 32.96
4 Unused Cap. goods 20 8.24 82.40
Sub-total (B) 115.36
Net Input Credit (A-B) 3,180.64
5 Excisable sale 600 24.72 14,832.00
Net Excise duty payable in Cash: [C-(A-B)] 11,651.36
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