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Former Member

Excise duty for 'sales company'?

dear all-

Although I'm not new to SAP, I'm new to excise duty regulation of the India tax ruling. Pls consider the following situations: 3 companies. One is a manufacturer that sells to a wholesale company. This second company sells to a 'sales company' that sells to end-customers. This third company is a trading company.

A few simple questions:

- I was informed (or at least that was my understanding) that only manufacturing companies are providing excise duty invoices. Is this correct?

- How is the 'sales company" (or trading company) supposed to keep track of excise duties?

rgds

Ben

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  • author's profile photo Former Member
    Former Member
    Posted on Nov 21, 2007 at 11:43 AM

    Hi Ben,

    You are right that excise duty can be levied only by a manufacturer. So wholesale company or trading company cannot have excise invoices.

    They can charge VAT (Sales tax, it can be local sales tax as some states in India have not yet adopted VAT).

    Manufacturers of specified materials as per Chapter IDs are legally bound to collect excise on their produce. While raising excise invoices by manufacturer to wholesale company, they recover the same from wholesale company. They can set-off the same against input excise duty and it is called CENVAT.There is no need for traders/wholesales to keep any tab on excise amount as they are not legally bound to pay to excise authorities nor they are eligible for any CENVAT credit.They ofcourse obviously bill the end-customer at their purchase price +VAT/Sales tax.

    Hope this is useful

    S Jayaram

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