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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.

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Presentation on theme: "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."— Presentation transcript:

1 Indirect Taxation

2 Part I – Value Added Tax

3 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

4 1: Identify whether VAT would be applicable in following transactions Sr.ParticularsVAT applicable? 1Sale of goods from Mumbai to Bangalore 2Export of goods to Europe 3Services provided from Mumbai to a trader of goods in Pune 4Sale of goods from Mumbai to Nasik

5 1: Identify whether VAT would be applicable in following transactions Sr.ParticularsVAT applicable? 1Sale of goods from Mumbai to Bangalore N 2Export of goods to Europe 3Services provided from Mumbai to a trader of goods in Pune 4Sale of goods from Mumbai to Nasik

6 1: Identify whether VAT would be applicable in following transactions Sr.ParticularsVAT applicable? 1Sale of goods from Mumbai to Bangalore N 2Export of goods to EuropeN 3Services provided from Mumbai to a trader of goods in Pune 4Sale of goods from Mumbai to Nasik

7 1: Identify whether VAT would be applicable in following transactions Sr.ParticularsVAT applicable? 1Sale of goods from Mumbai to Bangalore N 2Export of goods to EuropeN 3Services provided from Mumbai to a trader of goods in Pune N 4Sale of goods from Mumbai to Nasik

8 1: Identify whether VAT would be applicable in following transactions Sr.ParticularsVAT applicable? 1Sale of goods from Mumbai to Bangalore N 2Export of goods to EuropeN 3Services provided from Mumbai to a trader of goods in Pune N 4Sale of goods from Mumbai to Nasik Y

9 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

10 Period of filing VAT & VAT Return SrAnnual Tax LiabilityPeriod of payment of VAT & filing returns 1Upto Rs. 1 LacsHalf Yearly 2Above Rs 1 Lacs But less than Rs 10 Lacs Quarterly 2More than Rs. 10 LacsMonthly

11 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

12 2: Calculate Input Tax for the dealer based in Mumbai Sr.ParticularsInput tax?Rs.000 1Tax paid on purchase of goods from Pune 50 2Import duty paid on purchase of goods from Malaysia 150 3Sales Tax paid on purchase of goods from New Delhi 40 4Octroi paid on goods brought into city limits 10 Total

13 2: Calculate Input Tax for the dealer based in Mumbai Sr.ParticularsInput tax?Rs.000 1Tax paid on purchase of goods from Pune Y50 2Import duty paid on purchase of goods from Malaysia 150 3Sales Tax paid on purchase of goods from New Delhi 40 4Octroi paid on goods brought into city limits 10 Total

14 2: Calculate Input Tax for the dealer based in Mumbai Sr.ParticularsInput tax?Rs.000 1Tax paid on purchase of goods from Pune Y50 2Import duty paid on purchase of goods from Malaysia N 3Sales Tax paid on purchase of goods from New Delhi 40 4Octroi paid on goods brought into city limits 10 Total

15 2: Calculate Input Tax for the dealer based in Mumbai Sr.ParticularsInput tax?Rs.000 1Tax paid on purchase of goods from Pune Y50 2Import duty paid on purchase of goods from Malaysia N 3Sales Tax paid on purchase of goods from New Delhi N 4Octroi paid on goods brought into city limits 10 Total

16 2: Calculate Input Tax for the dealer based in Mumbai Sr.ParticularsInput tax?Rs.000 1Tax paid on purchase of goods from Pune Y50 2Import duty paid on purchase of goods from Malaysia N 3Sales Tax paid on purchase of goods from New Delhi N 4Octroi paid on goods brought into city limits N Total50

17 3: Calculate VAT payable by Lloyds Machinery Manufacturers Ltd. SrParticularsRs.000VAT 1Material purchased from local market 3000 2Value Added Tax on above375 3Conversion cost and profit1000 4Total Sale Value 5Output VAT rate12.5% 6Less: VAT credit 7Net VAT Payable

18 3: Calculate VAT payable by Lloyds Machinery Manufacturers Ltd. SrParticularsRs.000VAT 1Material purchased from local market 3000 2Value Added Tax on above375 3Conversion cost and profit1000 4Total Sale Value 5Output VAT rate12.5% 6Less: VAT credit 7Net VAT Payable

19 3: Calculate VAT payable by Lloyds Machinery Manufacturers Ltd. SrParticularsRs.000VAT 1Material purchased from local market 3000 2Value Added Tax on above375- 3Conversion cost and profit1000 4Total Sale Value 5Output VAT rate12.5% 6Less: VAT credit 7Net VAT Payable

20 3: Calculate VAT payable by Lloyds Machinery Manufacturers Ltd. SrParticularsRs.000VAT 1Material purchased from local market 3000 2Value Added Tax on above375- 3Conversion cost and profit1000 4Total Sale Value4000 5Output VAT rate12.5% 6Less: VAT credit 7Net VAT Payable

21 3: Calculate VAT payable by Lloyds Machinery Manufacturers Ltd. SrParticularsRs.000VAT 1Material purchased from local market 3000 2Value Added Tax on above375- 3Conversion cost and profit1000 4Total Sale Value4000 5Output VAT rate12.5%500 6Less: VAT credit 7Net VAT Payable

22 3: Calculate VAT payable by Lloyds Machinery Manufacturers Ltd. SrParticularsRs.000VAT 1Material purchased from local market 3000 2Value Added Tax on above375- 3Conversion cost and profit1000 4Total Sale Value4000 5Output VAT rate12.5%500 6Less: VAT credit375 7Net VAT Payable

23 3: Calculate VAT payable by Lloyds Machinery Manufacturers Ltd. SrParticularsRs.000VAT 1Material purchased from local market 3000 2Value Added Tax on above375- 3Conversion cost and profit1000 4Total Sale Value4000 5Output VAT rate12.5%500 6Less: VAT credit375 7Net VAT Payable125

24 4: Calculate VAT payable by Quick fix Ltd. SrParticularsRs.000VAT 1Material imported from Taiwan1000 2Import duty paid on above125 3Material purchased from local market2000 4Value Added Tax on above250 5Conversion cost and profit1875 6Total Sale Value 7Output VAT rate12.5% 8Less: VAT credit 9Net VAT Payable

25 4: Calculate VAT payable by Quick fix Ltd. SrParticularsRs.000VAT 1Material imported from Taiwan1000 2Import duty paid on above125 3Material purchased from local market2000 4Value Added Tax on above250 5Conversion cost and profit1875 6Total Sale Value 7Output VAT rate12.5% 8Less: VAT credit 9Net VAT Payable

26 4: Calculate VAT payable by Quick fix Ltd. SrParticularsRs.000VAT 1Material imported from Taiwan1000 2Import duty paid on above125 3Material purchased from local market2000 4Value Added Tax on above250- 5Conversion cost and profit1875 6Total Sale Value5000 7Output VAT rate12.5% 8Less: VAT credit 9Net VAT Payable

27 4: Calculate VAT payable by Quick fix Ltd. SrParticularsRs.000VAT 1Material imported from Taiwan1000 2Import duty paid on above125 3Material purchased from local market2000 4Value Added Tax on above250- 5Conversion cost and profit1875 6Total Sale Value5000 7Output VAT rate12.5%625 8Less: VAT credit 9Net VAT Payable

28 4: Calculate VAT payable by Quick fix Ltd. SrParticularsRs.000VAT 1Material imported from Taiwan1000 2Import duty paid on above125 3Material purchased from local market2000 4Value Added Tax on above250- 5Conversion cost and profit1875 6Total Sale Value5000 7Output VAT rate12.5%625 8Less: VAT credit250 9Net VAT Payable

29 4: Calculate VAT payable by Quick fix Ltd. SrParticularsRs.000VAT 1Material imported from Taiwan1000 2Import duty paid on above125 3Material purchased from local market2000 4Value Added Tax on above250- 5Conversion cost and profit1875 6Total Sale Value5000 7Output VAT rate12.5%625 8Less: VAT credit250 9Net VAT Payable375

30 5: Calculate VAT payable by Excel Printers Ltd. SrParticularsRs.000VAT 1Material imported from Taiwan500 2Import duty paid on above50 3Material purchased from local market4000 4Value Added Tax on above500 5Material purchased from another state1000 6Central Sales Tax paid20 7Conversion cost and profit1430 8Total Sale Value 9Output VAT rate12.5% 10Less: VAT credit 11Net VAT Payable

31 5: Calculate VAT payable by Excel Printers Ltd. SrParticularsRs.000VAT 1Material imported from Taiwan500 2Import duty paid on above50 3Material purchased from local market4000 4Value Added Tax on above500 5Material purchased from another state1000 6Central Sales Tax paid20 7Conversion cost and profit1430 8Total Sale Value 9Output VAT rate12.5% 10Less: VAT credit 11Net VAT Payable

32 5: Calculate VAT payable by Excel Printers Ltd. SrParticularsRs.000VAT 1Material imported from Taiwan500 2Import duty paid on above50 3Material purchased from local market4000 4Value Added Tax on above500- 5Material purchased from another state1000 6Central Sales Tax paid20 7Conversion cost and profit1430 8Total Sale Value 9Output VAT rate12.5% 10Less: VAT credit 11Net VAT Payable

33 5: Calculate VAT payable by Excel Printers Ltd. SrParticularsRs.000VAT 1Material imported from Taiwan500 2Import duty paid on above50 3Material purchased from local market4000 4Value Added Tax on above500- 5Material purchased from another state1000 6Central Sales Tax paid20 7Conversion cost and profit1430 8Total Sale Value 9Output VAT rate12.5% 10Less: VAT credit 11Net VAT Payable

34 5: Calculate VAT payable by Excel Printers Ltd. SrParticularsRs.000VAT 1Material imported from Taiwan500 2Import duty paid on above50 3Material purchased from local market4000 4Value Added Tax on above500- 5Material purchased from another state1000 6Central Sales Tax paid20 7Conversion cost and profit1430 8Total Sale Value7000 9Output VAT rate12.5% 10Less: VAT credit 11Net VAT Payable

35 5: Calculate VAT payable by Excel Printers Ltd. SrParticularsRs.000VAT 1Material imported from Taiwan500 2Import duty paid on above50 3Material purchased from local market4000 4Value Added Tax on above500- 5Material purchased from another state1000 6Central Sales Tax paid20 7Conversion cost and profit1430 8Total Sale Value7000 9Output VAT rate12.5%875 10Less: VAT credit 11Net VAT Payable

36 5: Calculate VAT payable by Excel Printers Ltd. SrParticularsRs.000VAT 1Material imported from Taiwan500 2Import duty paid on above50 3Material purchased from local market4000 4Value Added Tax on above500- 5Material purchased from another state1000 6Central Sales Tax paid20 7Conversion cost and profit1430 8Total Sale Value7000 9Output VAT rate12.5%875 10Less: VAT credit500 11Net VAT Payable375

37 6: Calculate VAT payable by Design Creations SrParticularsRs.000VAT 1Raw material purchase – local1600 2VAT paid on above200 3Office material purchase – local200 4Value Added Tax on above25 5Conversion cost and profit200 6Total 7Output VAT rate12.5% 8Less: VAT credit 9Net VAT Payable

38 6: Calculate VAT payable by Design Creations SrParticularsRs.000VAT 1Raw material purchase – local1600 2VAT paid on above200- 3Office material purchase – local200 4Value Added Tax on above25 5Conversion cost and profit200 6Total 7Output VAT rate12.5% 8Less: VAT credit 9Net VAT Payable

39 6: Calculate VAT payable by Design Creations SrParticularsRs.000VAT 1Raw material purchase – local1600 2VAT paid on above200- 3Office material purchase – local200 4Value Added Tax on above25- 5Conversion cost and profit200 6Total 7Output VAT rate12.5% 8Less: VAT credit 9Net VAT Payable

40 6: Calculate VAT payable by Design Creations SrParticularsRs.000VAT 1Raw material purchase – local1600 2VAT paid on above200- 3Office material purchase – local200 4Value Added Tax on above25- 5Conversion cost and profit200 6Total2000 7Output VAT rate12.5%250 8Less: VAT credit 9Net VAT Payable

41 6: Calculate VAT payable by Design Creations SrParticularsRs.000VAT 1Raw material purchase – local1600 2VAT paid on above200- 3Office material purchase – local200 4Value Added Tax on above25- 5Conversion cost and profit200 6Total2000 7Output VAT rate12.5%250 8Less: VAT credit225 9Net VAT Payable25

42 7: Calculate VAT payable by Clean Enviro Pvt. Ltd. SrParticularsRs.000VAT 1Raw material purchase – inter-state2400 2VAT paid on above300 3Consumables/spares – imported500 4Value Added Tax on above50 5Conversion cost and profit650 6Total 7Output VAT rate12.5% 8Less: VAT credit 9Net VAT Payable

43 7: Calculate VAT payable by Clean Enviro Pvt. Ltd. SrParticularsRs.000VAT 1Raw material purchase – inter-state2400 2VAT paid on above300 3Consumables/spares – imported500200 4Value Added Tax on above50 5Conversion cost and profit650 6Total 7Output VAT rate12.5% 8Less: VAT credit 9Net VAT Payable

44 7: Calculate VAT payable by Clean Enviro Pvt. Ltd. SrParticularsRs.000VAT 1Raw material purchase – inter-state2400 2VAT paid on above300 3Consumables/spares – imported500200 4Value Added Tax on above50 5Conversion cost and profit650 6Total3600 7Output VAT rate12.5%450 8Less: VAT credit 9Net VAT Payable

45 7: Calculate VAT payable by Clean Enviro Pvt. Ltd. SrParticularsRs.000VAT 1Raw material purchase – inter-state2400 2VAT paid on above300 3Consumables/spares – imported500200 4Value Added Tax on above50 5Conversion cost and profit650 6Total3600 7Output VAT rate12.5%450 8Less: VAT credit- 9Net VAT Payable

46 7: Calculate VAT payable by Clean Enviro Pvt. Ltd. SrParticularsRs.000VAT 1Raw material purchase – inter-state2400 2VAT paid on above300 3Consumables/spares – imported500200 4Value Added Tax on above50 5Conversion cost and profit650 6Total3600 7Output VAT rate12.5%450 8Less: VAT credit- 9Net VAT Payable450

47 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. NOYES Import DutyYESNO Central Sales TaxYESNO

48 Variants of VAT with regards to credit for VAT paid on inputs– Gross Product Variant Income VariantConsumption 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

49 7: Calculate VAT payable by Health Works Ltd. SrParticularsRs.000VAT 1Raw material purchase – local1200 2VAT paid on above150 3Capital exp(Depreciated@20% SLM)5000 4Value Added Tax on above625 5Conversion cost and profit200 6Total Sale Value 7Output VAT rate12.5% 8Less: VAT credit 9Net VAT

50 7: Calculate VAT payable by Health Works Ltd. SrParticularsRs.000VAT 1Raw material purchase – local1200 2VAT paid on above150- 3Capital exp(Depreciated@20% SLM)5000 4Value Added Tax on above625 5Conversion cost and profit200 6Total Sale Value 7Output VAT rate12.5% 8Less: VAT credit 9Net VAT

51 7: Calculate VAT payable by Health Works Ltd. SrParticularsRs.000VAT 1Raw material purchase – local1200 2VAT paid on above150- 3Capital exp(Depreciated@20% SLM)50001000 4Value Added Tax on above625 5Conversion cost and profit200 6Total Sale Value 7Output VAT rate12.5% 8Less: VAT credit 9Net VAT

52 7: Calculate VAT payable by Health Works Ltd. SrParticularsRs.000VAT 1Raw material purchase – local1200 2VAT paid on above150- 3Capital exp(Depreciated@20% SLM)50001000 4Value Added Tax on above625- 5Conversion cost and profit200 6Total Sale Value2400 7Output VAT rate12.5%300 8Less: VAT credit 9Net VAT

53 7: Calculate VAT payable by Health Works Ltd. SrParticularsRs.000VAT 1Raw material purchase – local1200 2VAT paid on above150- 3Capital exp(Depreciated@20% SLM)50001000 4Value Added Tax on above625- 5Conversion cost and profit200 6Total Sale Value2400 7Output VAT rate12.5%300 8Less: VAT credit775 9Net VAT

54 7: Calculate VAT payable by Health Works Ltd. SrParticularsRs.000VAT 1Raw material purchase – local1200 2VAT paid on above150- 3Capital exp(Depreciated@20% SLM)50001000 4Value Added Tax on above625- 5Conversion cost and profit200 6Total Sale Value2400 7Output VAT rate12.5%300 8Less: VAT credit775 9Net VAT carried forward for set-off against future VAT payable (475)

55 8: Calculate VAT payable by Fast Liners Ltd. having 100% Exports SrParticularsRs.000VAT 1Raw material purchase – local1600 2VAT paid on above200 3Capital exp(Depreciated@25% SLM)4000 4Value Added Tax on above500 5Conversion cost and profit400 6Total Sale Value 7Output VAT rate0% 8Less: VAT credit 9Net VAT

56 8: Calculate VAT payable by Fast Liners Ltd. having 100% Exports SrParticularsRs.000VAT 1Raw material purchase – local1600 2VAT paid on above200- 3Capital exp(Depreciated@25% SLM)40001000 4Value Added Tax on above500 5Conversion cost and profit400 6Total Sale Value 7Output VAT rate0% 8Less: VAT credit 9Net VAT

57 8: Calculate VAT payable by Fast Liners Ltd. having 100% Exports SrParticularsRs.000VAT 1Raw material purchase – local1600 2VAT paid on above200- 3Capital exp(Depreciated@25% SLM)40001000 4Value Added Tax on above500- 5Conversion cost and profit400 6Total Sale Value3000 7Output VAT rate0% 8Less: VAT credit 9Net VAT

58 8: Calculate VAT payable by Fast Liners Ltd. having 100% Exports SrParticularsRs.000VAT 1Raw material purchase – local1600 2VAT paid on above200- 3Capital exp(Depreciated@25% SLM)40001000 4Value Added Tax on above500- 5Conversion cost and profit400 6Total Sale Value3000 7Output VAT rate0%0 8Less: VAT credit 9Net VAT

59 8: Calculate VAT payable by Fast Liners Ltd. having 100% Exports SrParticularsRs.000VAT 1Raw material purchase – local1600 2VAT paid on above200- 3Capital exp(Depreciated@25% SLM)40001000 4Value Added Tax on above500- 5Conversion cost and profit400 6Total Sale Value3000 7Output VAT rate0%0 8Less: VAT credit700 9Net VAT

60 8: Calculate VAT payable by Fast Liners Ltd. having 100% Exports SrParticularsRs.000VAT 1Raw material purchase – local1600 2VAT paid on above200- 3Capital exp(Depreciated@25% SLM)40001000 4Value Added Tax on above500- 5Conversion cost and profit400 6Total Sale Value3000 7Output VAT rate0%0 8Less: VAT credit700 9Net VAT (eligible for claiming refund in absence of future VAT payable) (700)

61 Part II – Excise Duty

62 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

63 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

64 Concept of Taxable Event and Date 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

65 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

66 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)

67 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.

68 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

69 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

70 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)

71 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. SrParticularsWithout CENVAT With CENVAT 1Raw Material Cost X20000 2Add: Excise @ 8.24%1648 3Total21648 4Credit allowed 5R.M.Cost of X (net of excise) 6Value Addition 7Total

72 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. SrParticularsWithout CENVAT With CENVAT 1Raw Material Cost X20000 2Add: Excise @ 8.24%1648 3Total21648 4Credit allowed- 5R.M.Cost of X (net of excise)21648 6Value Addition30000 7Total51648

73 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. SrParticularsWithout CENVAT With CENVAT 7Total51648 8Add: Excise @ 8.24%4256 9Cost of Product Y55904 10Credit allowed 11Cost of Y (net of excise) 12Value Addition 13Total

74 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. SrParticularsWithout CENVAT With CENVAT 7Total51648 8Add: Excise @ 8.24%4256 9Cost of Product Y55904 10Credit allowed- 11Cost of Y (net of excise)55904 12Value Addition40000 13Total95904

75 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. SrParticularsWithout CENVAT With CENVAT 13Total95904 14Add: Excise @ 8.24%7902 15Cost of Product Z103806

76 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. SrParticularsWithout CENVAT With CENVAT 1Raw Material Cost X 20000 2Add: Excise @ 8.24% 1648 3Total 21648 4Credit allowed - 5R.M.Cost of X (net of excise) 21648 6Value Addition 30000 7Total 51648

77 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. SrParticularsWithout CENVAT With CENVAT 1Raw Material Cost X 20000 2Add: Excise @ 8.24% 1648 3Total 21648 4Credit allowed - 1648 5R.M.Cost of X (net of excise) 21648 20000 6Value Addition 30000 7Total 51648 50000

78 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. SrParticularsWithout CENVAT With CENVAT 7Total 51648 50000 8Add: Excise @ 8.24% 4256 4120 9Cost of Product Y 55904 54120 10Credit allowed - 11Cost of Y (net of excise) 55904 12Value Addition 40000 13Total 95904

79 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. SrParticularsWithout CENVAT With CENVAT 7Total 51648 50000 8Add: Excise @ 8.24% 4256 4120 9Cost of Product Y 55904 54120 10Credit allowed - 4120 11Cost of Y (net of excise) 55904 50000 12Value Addition 40000 13Total 95904 90000

80 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. SrParticularsWithout CENVAT With CENVAT 13Total 95904 90000 14Add: Excise @ 8.24% 7902 7416 15Cost of Product Z 103806 97416

81 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 ValueRs.1,000,000 Excise on sales @ 8.24%Rs.????? Total amount of purchasesRs. 600,000 Excise on purchases @ 8.24%Rs. 49,440 Amount of cenvat credit availedRs. ????? Net Excise Duty payableRs. ????? 2. Calculate CENVAT credit and Excise Duty Payable

82 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 ValueRs.1,000,000 Excise on sales @ 8.24%Rs.82,400 Total amount of purchasesRs. 600,000 Excise on purchases @ 8.24%Rs. 49,440 Amount of cenvat credit availedRs. ????? Net Excise Duty payableRs. ????? 2. Calculate CENVAT credit and Excise Duty Payable

83 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 ValueRs.1,000,000 Excise on sales @ 8.24%Rs.82,400 Total amount of purchasesRs. 600,000 Excise on purchases @ 8.24%Rs. 49,440 Amount of cenvat credit availedRs.49,440 Net Excise Duty payableRs. ????? 2. Calculate CENVAT credit and Excise Duty Payable

84 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 ValueRs.1,000,000 Excise on sales @ 8.24%Rs.82,400 Total amount of purchasesRs. 600,000 Excise on purchases @ 8.24%Rs. 49,440 Amount of cenvat credit availedRs. 49,440 Net Excise Duty payableRs. 32,960 2. Calculate CENVAT credit and Excise Duty Payable

85 Assessable Value = Cum-duty price - permissible deductions * 100 100 + 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

86 Question: Online Tec Ltd. gives the following information. Derive the assessable value of excisable goods. ParticularsAmount (Rs) Cum-duty wholesale price including following costs: 15,000 Sales tax2,000 Normal packing cost1,000 Freight & Insurance1,500 Durable & returnable packing1,500 Rate of excise duty @ 8.24%

87 Answer: ParticularsAmount (Rs) Cum-duty wholesale price15,000 Less: Sales Tax2,000 Normal packing cost Freight & Insurance Durable & returnable packing Assessable Value

88 Answer: ParticularsAmount (Rs) Cum-duty wholesale price15,000 Less: Sales Tax2,000 Normal packing cost- Freight & Insurance Durable & returnable packing Assessable Value

89 Answer: ParticularsAmount (Rs) Cum-duty wholesale price15,000 Less: Sales Tax2,000 Normal packing cost- Freight & Insurance1,500 Durable & returnable packing Assessable Value

90 Answer: ParticularsAmount (Rs) Cum-duty wholesale price15,000 Less: Sales Tax2,000 Normal packing cost- Freight & Insurance1,500 Durable & returnable packing1,500 Sub-total10,000 Assessable Value?

91 Answer: ParticularsAmount (Rs) Cum-duty wholesale price15,000 Less: Sales Tax2,000 Normal packing cost- Freight & Insurance1,500 Durable & returnable packing1,500 Sub-total10,000 Assessable Value = 10,000 ÷ 108.24%9,239 Hence, excise duty = Rs. 761 (Rs. 9,239 * 8.24%)

92 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

93 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: ParticularsAmount (Rs) Retail Sale price of each packet20

94 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: ParticularsAmount (Rs) Retail Sale price of each packet20 Less : Abatement8 Assessable Value per packet12

95 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: ParticularsAmount (Rs) Retail Sale price of each packet20 Less : Abatement8 Assessable Value per packet12 Total assessable value (Rs 12 * 100)1,200

96 5. Compute CENVAT credit and Excise Duty payable SrParticularsRs.lacsDuty%Cenvat 1Input Raw Material2008.24 2Capital goods for mfr.4008.24 3Input R.M. rejected4 4Unused Cap. goods20 5Excisable sale60024.72

97 5. Compute CENVAT credit and Excise Duty payable SrParticularsRs.lacsDuty%Cvat 000 1Input R.M.2008.24 2Capital goods for mfr. (credit of 50% in 1 st year) 4008.24 Total Input credit(A) 3Input R.M. rejected4 4Unused Cap. goods20 Sub-total(B) Net Input Credit 5Excisable sale60024.72 Net Excise duty payable in Cash

98 5. Compute CENVAT credit and Excise Duty payable SrParticularsRs.lacsDuty%Cvat 000 1Input R.M.2008.241,648 2Capital goods for mfr. (credit of 50% in 1 st year) 4008.24 Total Input credit(A) 3Input R.M. rejected4 4Unused Cap. goods20 Sub-total(B) Net Input Credit 5Excisable sale60024.72 Net Excise duty payable in Cash

99 5. Compute CENVAT credit and Excise Duty payable SrParticularsRs.lacsDuty%Cvat 000 1Input R.M.2008.241,648 2Capital goods for mfr. (credit of 50% in 1 st year) 4008.241,648 Total Input credit(A)3,296 3Input R.M. rejected4 4Unused Cap. goods20 Sub-total(B) Net Input Credit 5Excisable sale60024.72 Net Excise duty payable in Cash

100 5. Compute CENVAT credit and Excise Duty payable SrParticularsRs.lacsDuty%Cvat 000 1Input R.M.2008.241,648 2Capital goods for mfr. (credit of 50% in 1 st year) 4008.241,648 Total Input credit(A)3,296 3Input R.M. rejected48.2432.96 4Unused Cap. goods20 Sub-total(B) Net Input Credit 5Excisable sale60024.72 Net Excise duty payable in Cash

101 5. Compute CENVAT credit and Excise Duty payable SrParticularsRs.lacsDuty%Cvat 000 1Input R.M.2008.241,648 2Capital goods for mfr. (credit of 50% in 1 st year) 4008.241,648 Total Input credit(A)3,296 3Input R.M. rejected48.2432.96 4Unused Cap. goods208.2482.40 Sub-total(B)115.36 Net Input Credit 5Excisable sale60024.72 Net Excise duty payable in Cash

102 5. Compute CENVAT credit and Excise Duty payable SrParticularsRs.lacsDuty%Cvat 000 1Input R.M.2008.241,648 2Capital goods for mfr. (credit of 50% in 1 st year) 4008.241,648 Total Input credit(A)3,296 3Input R.M. rejected48.2432.96 4Unused Cap. goods208.2482.40 Sub-total(B)115.36 Net Input Credit(A-B)3,180.64 5Excisable sale60024.72 Net Excise duty payable in Cash:

103 5. Compute CENVAT credit and Excise Duty payable SrParticularsRs.lacsDuty%Cvat 000 1Input R.M.2008.241,648 2Capital goods for mfr. (credit of 50% in 1 st year) 4008.241,648 Total Input credit(A)3,296 3Input R.M. rejected48.2432.96 4Unused Cap. goods208.2482.40 Sub-total(B)115.36 Net Input Credit(A-B)3,180.64 5Excisable sale60024.7214,832.0 Net Excise duty payable in Cash

104 5. Compute CENVAT credit and Excise Duty payable SrParticularsRs.lacsDuty%Cvat 000 1Input R.M.2008.241,648 2Capital goods for mfr. (credit of 50% in 1 st year) 4008.241,648 Total Input credit(A)3,296 3Input R.M. rejected48.2432.96 4Unused Cap. goods208.2482.40 Sub-total(B)115.36 Net Input Credit(A-B)3,180.64 5Excisable sale60024.7214,832.00 Net Excise duty payable in Cash: [C-(A-B)]11,651.36

105 Thank You


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