10 March 2012
Dear Sir/Madam, Our Scope of Supply of Control Panel is Rs.5,00,000 & have received material to be fitted in Control panel from customer worth Rs.5,00,000. We will bill the customer with Rs.10,00,000 with Excise duty of Rs.1,03,000. But for VAT calculation the free cost material worth Rs.5,00,000 must be removed as stated by customer and to be calculated on Rs.6,03,000 (ie., 11,03,000 - FOC material Rs.5,00,000 = Rs.6,03,000).
Is this method acceptable. If so under what rule / sections of Tamilnadu VAT Act.
Experts please advice at the earliest and thanks in advance.
18 March 2012
Mr TR Mohan, Yes it can be done.As you have not purchased the free supply items you will not be selling them also.In the invoice you reduce the product value by deducting the cost of free supply goods and charge VAT on the net value. Excise duty rules are diffrent....MJK
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